0001558370-20-013825 | 10-Q | XBRL Viewer

Print Document View Excel Document

Investments - Net Investment Income (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Net investment income
Interest income	$ 2,149	$ 1,678	$ 6,242	$ 4,140
Dividend income	109	132	354	299
Less: investment expense	(120)	(81)	(309)	(267)
Net investment income	$ 2,138	$ 1,729	$ 6,287	$ 4,172

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Investments:
Fixed maturity securities available for sale, at fair value (amortized cost: $377,658 in 2020; $211,278 in 2019)	$ 390,811	$ 217,151
Equity securities, at fair value (cost: $43,071 in 2020; $21,336 in 2019)	45,037	22,328
Total investments	435,848	239,479
Cash and cash equivalents	14,033	33,119
Restricted cash	163	230
Accrued investment income	2,366	1,386
Premium receivable	48,117	36,237
Deferred policy acquisition costs	34,584	25,201
Reinsurance recoverable on unpaid losses and loss adjustment expenses	92,537	12,952
Reinsurance recoverable on paid losses and loss adjustment expenses	10,497	4,303
Ceded unearned premiums	28,461	26,105
Prepaid expenses and other assets	31,656	14,861
Property and equipment, net	753	845
Intangible assets	744	744
Total assets	699,759	395,462
Liabilities:
Accounts payable and other accrued liabilities	13,226	13,555
Reserve for losses and loss adjustment expenses	132,077	16,821
Unearned premiums	173,587	130,373
Ceded premium payable	11,685	11,383
Funds held under reinsurance treaty	3,061	1,658
Income and excise taxes payable		1,117
Deferred tax liabilities, net	4,228	1,999
Total liabilities	337,864	176,906
Stockholders' equity:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized as of September 30, 2020 and December 31, 2019, respectively, 0 shares issued and outstanding as of September 30, 2020 and December 31, 2019
Common stock, $0.0001 par value, 500,000,000 shares authorized, 25,518,957 and 23,468,750 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively	3	2
Additional paid-in capital	309,496	180,012
Accumulated other comprehensive income	10,438	4,686
Retained earnings	41,958	33,856
Total stockholders' equity	361,895	218,556
Total liabilities and stockholders' equity	$ 699,759	$ 395,462

Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)
Other underwriting expenses including stock-based compensation	$ 551	$ 410	$ 1,457	$ 23,677

Stock-Based Compensation - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Stock-based compensation expense
Stock compensation charge		$ 551	$ 410	$ 1,457	$ 23,677
2014 Management Incentive Plan
Stock-based compensation expense
Stock compensation charge	$ 23,000

Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019	Sep. 30, 2019	Dec. 31, 2018
Cash and cash equivalents and restricted cash and cash equivalents
Cash and cash equivalents	$ 14,033	$ 33,119
Restricted cash	163	230
Cash and cash equivalents and restricted cash	$ 14,196	$ 33,349	$ 16,902	$ 9,924

Underwriting Information - Gross Written Premiums by State (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Gross written premiums
Amount	$ 102,967	$ 66,242	$ 258,268	$ 178,619
% of GWP	100.00%	100.00%	100.00%	100.00%
California
Gross written premiums
Amount	$ 52,960	$ 36,789	$ 124,131	$ 99,543
% of GWP	51.40%	55.50%	48.10%	55.70%
Texas
Gross written premiums
Amount	$ 20,460	$ 11,239	$ 55,047	$ 32,678
% of GWP	19.90%	17.00%	21.30%	18.30%
Hawaii
Gross written premiums
Amount	$ 5,097	$ 3,675	$ 11,990	$ 8,688
% of GWP	5.00%	5.50%	4.60%	4.90%
Washington
Gross written premiums
Amount	$ 4,340	$ 2,910	$ 10,002	$ 6,430
% of GWP	4.20%	4.40%	3.90%	3.60%
South Carolina
Gross written premiums
Amount	$ 2,089	$ 1,258	$ 7,203	$ 4,614
% of GWP	2.00%	1.90%	2.80%	2.50%
North Carolina
Gross written premiums
Amount	$ 2,839	$ 967	$ 7,131	$ 2,654
% of GWP	2.80%	1.50%	2.80%	1.50%
Oregon
Gross written premiums
Amount	$ 2,912	$ 2,153	$ 7,298	$ 5,279
% of GWP	2.80%	3.30%	2.80%	3.00%
Mississippi
Gross written premiums
Amount	$ 2,173	$ 1,315	$ 5,628	$ 3,383
% of GWP	2.10%	2.00%	2.20%	1.90%
Other
Gross written premiums
Amount	$ 10,097	$ 5,936	$ 29,838	$ 15,350
% of GWP	9.80%	8.90%	11.50%	8.60%

Capital Stock - Stock Split (Details)	Mar. 15, 2019
Capital Stock
Forward stock split	17,000,000

Capital Stock

9 Months Ended

Sep. 30, 2020

Capital Stock

Capital Stock

7. Capital Stock

As of September 30, 2020 and December 31, 2019, the Company has 5,000,000 preferred shares authorized with a par value of $0.0001 and no preferred shares issued and outstanding. As of September 30, 2020 and December 31, 2019, the Company has 500,000,000 common shares authorized and 25,518,957 and 23,468,750 common shares issued and outstanding, respectively, with a par value of $0.0001. Additional paid in capital is $309.5 million as of September 30, 2020 and $180.0 million as of December 31, 2019.

On March 15, 2019, the Company effected a 17,000,000 for one forward stock split in conjunction with domestication in the United States. All share and per share information included in the condensed consolidated financial statements and notes to the condensed consolidated financial statements have been retroactively adjusted to reflect the stock split for the Company’s common stock for all periods presented.

On April 22, 2019, the Company completed its IPO with the sale of 6,468,750 shares of common stock at a price to the public of $15.00 per share. The Company received net proceeds of approximately $87.4 million, after deducting underwriting discounts and commissions and offering costs.

On January 9, 2020, the Company sold 750,000 shares of common stock to the public at a price of $49.00 per share (along with 5,000,000 shares sold by existing stockholders) in an underwritten public offering. The Company received net proceeds of approximately $35.5 million, after deducting underwriting discounts and commissions and offering costs.

On June 26, 2020, the Company sold 1,150,000 shares of common stock to the public at a price of $82.00 per share in an underwritten public offering. The Company received net proceeds of approximately $90.1 million, after deducting underwriting discounts and commissions and offering costs.

Common stock reserved for future issuance consists of the following as of September 30, 2020:


Stock options outstanding under 2019 Equity Incentive Plan	996,870
Restricted stock units outstanding under 2019 Equity Incentive Plan	14,734
Shares authorized for future issuance under 2019 Equity Incentive Plan	1,970,618
Shares authorized for future issuance under 2019 Employee Stock Purchase Plan	451,633
Total	3,433,855

Underwriting Information - Reportable Segments (Details) - segment	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Reportable segment
Number of reportable segments	1	1	1	1

Stock-Based Compensation - Management Incentive Plan Prior to IPO (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Mar. 15, 2019
Stock-Based Compensation
Stock compensation charge		$ 551	$ 410	$ 1,457	$ 23,677
Increase in additional paid in capital				$ 1,457	$ 23,677
2014 Management Incentive Plan
Stock-Based Compensation
Units outstanding						12,552,825
Stock compensation charge	$ 23,000
Increase in additional paid in capital	$ 23,000

Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2020

Fair Value Measurements

Schedule of fair value hierarchy for financial assets and liabilities


September 30, 2020	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Fixed maturity securities
U.S. Governments	$	—	$	16,652	$	—	$	16,652
States, territories, and possessions		—		4,672		—		4,672
Political subdivisions		—		2,374		—		2,374
Special revenue excluding mortgage/asset-backed securities		—		37,093		—		37,093
Industrial and miscellaneous		—		247,432		—		247,432
Mortgage/asset-backed securities		—		82,588		—		82,588
Equity securities		45,037		—		—		45,037
Cash, cash equivalents, and restricted cash		14,196		—		—		14,196
Total assets	$	59,233	$	390,811	$	—	$	450,044


December 31, 2019	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Fixed maturity securities
U.S. Governments	$	—	$	13,679	$	—	$	13,679
States, territories, and possessions		—		2,445		—		2,445
Political subdivisions		—		1,942		—		1,942
Special revenue excluding mortgage/asset-backed securities		—		18,436		—		18,436
Industrial and miscellaneous		—		129,013		—		129,013
Mortgage/asset-backed securities		—		50,136		1,500		51,636
Equity securities		—		22,328		—		22,328
Cash, cash equivalents, and restricted cash		28,350		4,999		—		33,349
Total assets	$	28,350	$	242,978	$	1,500	$	272,828

Long-term Debt - Interest (Details) - Senior Notes - 2018 Floating Rate Notes - USD ($) $ in Millions	3 Months Ended	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2019
Long-term debt
Interest expense	$ 1.1	$ 1.2
Interest paid	$ 0.7	$ 1.1

Underwriting Information - Gross Written Premiums by Product (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Gross written premiums
Amount	$ 102,967	$ 66,242	$ 258,268	$ 178,619
% of GWP	100.00%	100.00%	100.00%	100.00%
Residential Earthquake
Gross written premiums
Amount	$ 40,507	$ 35,711	$ 103,503	$ 95,005
% of GWP	39.30%	53.90%	40.10%	53.20%
Commercial All Risk
Gross written premiums
Amount	$ 12,467	$ 7,077	$ 39,765	$ 21,929
% of GWP	12.10%	10.70%	15.40%	12.30%
Commercial Earthquake
Gross written premiums
Amount	$ 18,061	$ 8,402	$ 40,727	$ 23,020
% of GWP	17.50%	12.70%	15.80%	12.90%
Specialty Homeowners
Gross written premiums
Amount	$ 17,048	$ 8,572	$ 38,461	$ 24,994
% of GWP	16.60%	12.90%	14.90%	14.00%
Inland Marine
Gross written premiums
Amount	$ 4,406	$ 1,060	$ 9,747	$ 1,294
% of GWP	4.30%	1.60%	3.80%	0.70%
Hawaii Hurricane
Gross written premiums
Amount	$ 4,360	$ 3,299	$ 10,296	$ 8,048
% of GWP	4.20%	5.00%	4.00%	4.50%
Residential Flood
Gross written premiums
Amount	$ 2,170	$ 1,450	$ 5,728	$ 3,494
% of GWP	2.10%	2.20%	2.20%	2.00%
Other
Gross written premiums
Amount	$ 3,948	$ 671	$ 10,041	$ 835
% of GWP	3.90%	1.00%	3.80%	0.40%

Investments (Tables)

9 Months Ended

Sep. 30, 2020

Investments

Schedule of available-for-sale investments


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
September 30, 2020	Cost or Cost		Gains		Losses		Value
	(in thousands)
Fixed maturities:
U.S. Governments	$	15,809	$	844	$	(1)	$	16,652
States, territories, and possessions		4,338		352		(18)		4,672
Political subdivisions		2,286		88		—		2,374
Special revenue excluding mortgage/asset-backed securities		36,075		1,099		(81)		37,093
Industrial and miscellaneous		239,007		9,575		(1,150)		247,432
Mortgage/asset-backed securities		80,143		2,799		(354)		82,588
Total available-for-sale investments	$	377,658	$	14,757	$	(1,604)	$	390,811


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
December 31, 2019	Cost or Cost		Gains		Losses		Value
	(in thousands)
Fixed maturities:
U.S. Governments	$	13,371	$	321	$	(13)	$	13,679
States, territories, and possessions		2,298		147		—		2,445
Political subdivisions		1,913		29		—		1,942
Special revenue excluding mortgage/asset-backed securities		18,139		343		(46)		18,436
Industrial and miscellaneous		124,726		4,326		(39)		129,013
Mortgage/asset-backed securities		50,831		824		(19)		51,636
Total available-for-sale investments	$	211,278	$	5,990	$	(117)	$	217,151

Schedule of aggregate fair value and gross unrealized losses


	Less Than 12 Months				More Than 12 Months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
September 30, 2020	Value		Losses		Value		Losses		Value		Losses
	(in thousands)
Fixed maturity securities:
U.S. Governments	$	500	$	(1)	$	—	$	—	$	500	$	(1)
States, territories, and possessions		1,490		(18)		—		—		1,490		(18)
Political subdivisions		—		—		—		—		—		—
Special revenue excluding mortgage/asset-backed securities		7,893		(81)		—		—		7,893		(81)
Industrial and miscellaneous		64,592		(1,150)		—		—		64,592		(1,150)
Mortgage/asset-backed securities		21,812		(354)		1		—		21,813		(354)
Total	$	96,287	$	(1,604)	$	1	$	—	$	96,288	$	(1,604)


	Less Than 12 Months				More Than 12 Months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
December 31, 2019	Value		Losses		Value		Losses		Value		Losses
	(in thousands)
Fixed maturity securities:
U.S. Governments	$	1,235	$	(11)	$	1,827	$	(2)	$	3,062	$	(13)
States, territories, and possessions		—		—		—		—		—		—
Political subdivisions		—		—		—		—		—		—
Special revenue excluding mortgage/asset-backed securities		3,548		(46)		—		—		3,548		(46)
Industrial and miscellaneous		6,929		(38)		188		(1)		7,117		(39)
Mortgage/asset-backed securities		7,035		(19)		182		—		7,217		(19)
Total	$	18,747	$	(114)	$	2,197	$	(3)	$	20,944	$	(117)

Schedule of contractual maturities of available-for-sale securities


	Amortized		Fair
	Cost		Value
	(in thousands)
Due within one year	$	11,521	$	11,650
Due after one year through five years		144,424		148,032
Due after five years through ten years		104,751		110,836
Due after ten years		36,819		37,705
Mortgage and asset-backed securities		80,143		82,588
	$	377,658	$	390,811

Schedule of net investment income


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
	(in thousands)				(in thousands)
Interest income	$	2,149	$	1,678	$	6,242	$	4,140
Dividend income		109		132		354		299
Investment expense		(120)		(81)		(309)		(267)
Net investment income	$	2,138	$	1,729	$	6,287	$	4,172

Schedule of net realized and unrealized investment gains and losses


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
		(in thousands)				(in thousands)
Realized gains:
Gains on sales of fixed maturity securities	$	66	$	38	$	256	$	135
Gains on sales of equity securities		59		—		57		64
Total realized gains		125		38		313		199
Realized losses:
Losses on sales of fixed maturity securities		—		(1)		(44)		(70)
Losses on sales of equity securities		—		(21)		—		(174)
Total realized losses		—		(22)		(44)		(244)
Net realized investment gains (losses)		125		16		269		(45)
Net unrealized gains (losses) on equity securities		(101)		345		974		3,310
Net realized and unrealized gains on investments	$	24	$	361	$	1,243	$	3,265

Capital Stock - Stock Offerings (Details) - USD ($) $ / shares in Units, $ in Millions	Jun. 26, 2020	Jan. 09, 2020	Apr. 22, 2019
Capital Stock
Net proceeds	$ 90.1
IPO
Capital Stock
Issuance of common stock in stock offering, net of offering costs (in shares)			6,468,750
Share price (in dollars per share)			$ 15.00
Net proceeds			$ 87.4
Secondary Offering
Capital Stock
Issuance of common stock in stock offering, net of offering costs (in shares)	1,150,000
Share price (in dollars per share)	$ 82.00	$ 49.00
Net proceeds		$ 35.5
Selling stockholders
Capital Stock
Issuance of common stock in stock offering, net of offering costs (in shares)		5,000,000
Underwriter option
Capital Stock
Issuance of common stock in stock offering, net of offering costs (in shares)		750,000

Stock-Based Compensation - Vesting (Details)	9 Months Ended
Stock-Based Compensation - Vesting (Details)	Sep. 30, 2020
Stock Options
Stock-Based Compensation
Expiry period	10 years
Stock Options \| Share-based Payment Arrangement, Tranche One
Stock-Based Compensation
Vesting period	2 years
Stock Options \| Share-based Payment Arrangement, Tranche One, First Anniversary
Stock-Based Compensation
Vesting period	1 year
Stock Options \| Share-based Payment Arrangement, Tranche One, First Anniversary \| Minimum
Stock-Based Compensation
Vesting percentage (as a percent)	25.00%
Stock Options \| Share-based Payment Arrangement, Tranche One, First Anniversary \| Maximum
Stock-Based Compensation
Vesting percentage (as a percent)	50.00%
Stock Options \| Share-based Payment Arrangement, Tranche Two
Stock-Based Compensation
Vesting period	4 years
Stock Options \| Share-based Payment Arrangement, Tranche Two, First Anniversary
Stock-Based Compensation
Vesting period	1 year
Stock Options \| Share-based Payment Arrangement, Tranche Two, First Anniversary \| Minimum
Stock-Based Compensation
Vesting percentage (as a percent)	25.00%
Stock Options \| Share-based Payment Arrangement, Tranche Two, First Anniversary \| Maximum
Stock-Based Compensation
Vesting percentage (as a percent)	50.00%
Restricted Stock Units \| Share-based Payment Arrangement, Tranche One
Stock-Based Compensation
Vesting period	1 year
Vesting percentage (as a percent)	100.00%
Restricted Stock Units \| Share-based Payment Arrangement, Tranche Two
Stock-Based Compensation
Vesting period	3 years
Restricted Stock Units \| Share-based Payment Arrangement, Tranche Two, First Anniversary
Stock-Based Compensation
Vesting period	1 year
Vesting percentage (as a percent)	33.33%
Restricted Stock Units \| Share-based Payment Arrangement, Tranche Two, Second Anniversary
Stock-Based Compensation
Vesting period	1 year
Vesting percentage (as a percent)	33.33%
Restricted Stock Units \| Share-based Payment Arrangement, Tranche Two, Third Anniversary
Stock-Based Compensation
Vesting period	1 year
Vesting percentage (as a percent)	33.33%

Stock-Based Compensation - Stock Options - Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2019
Number of shares
Outstanding at beginning of period (in shares)	1,046,373
Granted (in shares)	90,757
Exercised (in shares)	(115,774)
Canceled (in shares)	(24,486)
Outstanding at end of period (in shares)	996,870	1,046,373
Weighted-average exercise price
Outstanding at beginning of period (in dollars per share)	$ 17.05
Granted (in dollars per share)	80.43
Exercised (in dollars per share)	15.03
Canceled (in dollars per share)	21.46
Outstanding at end of period (in dollars per share)	$ 22.95	$ 17.05
Additional disclosures
Weighted average remaining contractual term	8 years 8 months 5 days	9 years 3 months 29 days
Aggregate intrinsic value	$ 81,128	$ 35,039
Vested and Exercisable
Vested and expected to vest, exercisable, number (in shares)	422,203
Vested and expected to vest, exercisable, weighted average exercise price (in dollars per share)	$ 15.07
Vested and expected to vest, exercisable, weighted average remaining contractual term	8 years 6 months 15 days
Vested and expected to vest, exercisable, aggregate intrinsic value	$ 37,649

Income Taxes - Effective Income Tax Rate Reconciliation (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended		21 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020
Effective Income Tax Rate Reconciliation, Percent
Statutory tax rate (as a percent)	21.00%	21.00%	21.00%	21.00%	21.00%
Effective Income Tax Rate Reconciliation, Other Reconciling Items, Amount
Reversal of a portion of the deferred tax valuation allowance				$ 1.7
Effective Income Tax Rate Reconciliation, Nondeductible Expense, Amount
Addback related to stock compensation not deductible for tax purposes				$ 4.8

Earnings Per Share - Tabular Disclosure (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Net income (loss):
Net income (loss)	$ (15,685)	$ 7,454	$ 8,102	$ (258)
Net income (loss) - basic	(15,685)	7,454	8,102	(258)
Net income (loss) - diluted	$ (15,685)	$ 7,454	$ 8,102	$ (258)
Weighted average common shares outstanding:
Basic (in shares)	25,492,274	23,468,750	24,654,722	20,838,599
Common Share equivalents (in shares)		416,387	729,796
Diluted (in shares)	25,492,274	23,885,137	25,384,518	20,838,599
Earnings per share:
Basic (in dollars per share)	$ (0.62)	$ 0.32	$ 0.33	$ (0.01)
Earnings per share:
Diluted (in dollars per share)	$ (0.62)	$ 0.31	$ 0.32	$ (0.01)

Earnings Per Share

9 Months Ended

Sep. 30, 2020

Earnings Per Share

Earnings Per Share

10. Earnings Per Share

The following table sets out earnings per share of common stock:


	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019
	(in thousands, except shares and per share data)				(in thousands, except shares and per share data)
Net income (loss)	$	(15,685)	$	7,454	$	8,102	$	(258)
Weighted average common shares outstanding:
Basic		25,492,274		23,468,750		24,654,722		20,838,599
Common Share equivalents		—		416,387		729,796		—
Diluted		25,492,274		23,885,137		25,384,518		20,838,599

Earnings per share:
Basic	$	(0.62)	$	0.32	$	0.33	$	(0.01)
Diluted	$	(0.62)	$	0.31	$	0.32	$	(0.01)

Common share equivalents relate primarily to outstanding stock options and RSUs under the 2019 Plan and unpurchased shares under the 2019 ESPP and are calculated using the treasury stock method. For the respective three months ended September 31, 2020 and nine months ended September 30, 2019, there were 761,337 and 196,741 common share equivalents excluded from the calculation of diluted earnings per share as their effects were anti-dilutive due to the net loss reported in these periods.

Capital Stock - Shares Issued and Outstanding (Details) - USD ($) $ / shares in Units, $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Preferred stock
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock
Common stock, shares authorized (in shares)	500,000,000	500,000,000
Common stock, shares issued (in shares)	25,518,957	23,468,750
Common stock, shares outstanding (in shares)	25,518,957	23,468,750
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Additional paid-in capital
Additional paid-in capital	$ 309,496	$ 180,012

Long-term Debt	9 Months Ended
Long-term Debt	Sep. 30, 2020
Long-term Debt
Long-term Debt	5. Long-term Debt In September 2018, the Company completed a private placement financing of $20.0 million floating rate senior secured notes (“Floating Rate Notes”). These Floating Rate Notes were redeemed in May 2019 pursuant to their terms and the Company did not have any debt subsequent to May 2019. The Company recognized a charge of $1.3 million upon redemption with $0.4 million due to the redemption premium and $0.9 million due to the write-off of unamortized debt issuance costs. The $0.4 million redemption premium was recognized as a component of interest expense and the $0.9 million issuance cost write-off was recognized as a component of other underwriting expenses in the Company's unaudited condensed consolidated statement of income (loss) and comprehensive income (loss). The Company incurred and paid $1.1 million and $1.2 million in interest related to the Floating Rate Notes for the nine months ended September 30, 2019.

Subsequent Events	9 Months Ended
Subsequent Events	Sep. 30, 2020
Subsequent Events
Subsequent Events	13. Subsequent Events On November 10, 2020, the Company announced that its wholly-owned subsidiary, PSIC, had entered into a Renewal Rights Agreement, dated as of November 9, 2020, with GeoVera Holdings Inc. (“GeoVera”), pursuant to which GeoVera agreed to sell, and the Company’s PSIC subsidiary agreed to purchase, the renewal rights to GeoVera’s Hawaii residential Hurricane policies. The sale was consummated on November 9, 2020. As part of this agreement, the Company has the ability to gain approximately $17 million of written premiums over the next 12 months. There is no guarantee that current GeoVera policyholders will renew their Hurricane policies with the Company; therefore, the ultimate impact to the Company’s written premiums is uncertain.

Income Taxes	9 Months Ended
Income Taxes	Sep. 30, 2020
Income Taxes
Income Taxes	6. Income Taxes Prior to March 2019, the Company was a Cayman Islands incorporated holding company with U.K. tax residency. On March 14, 2019, the Company implemented a domestication (“the Domestication”) pursuant to Section 388 of the Delaware General Corporation Law and Section 206 of the Companies Law (2018 Revision), as amended, of the Cayman Islands pursuant to which it became a Delaware corporation and no longer subject to the laws of the Cayman Islands. Historically, the Company’s Bermuda based subsidiary, PSRE, was not required to pay any taxes on its income or capital gains but was subject to a 1% U.S. federal excise tax on reinsurance premiums assumed. The Company has filed an irrevocable election for PSRE to be taxed as a U.S. domestic corporation under Section 953(d) of the Code effective January 1, 2019. Prior to 2019, the Company maintained a valuation allowance on the U.S. tax attributes due to significant negative evidence, including cumulative U.S. losses in the most recent three-year period and our assessment that the realization of the net deferred tax assets did not meet the "more likely than not" criteria under ASC 740, Income Taxes. Management assessed available positive and negative evidence to estimate whether sufficient future taxable income would be generated to permit use of the existing deferred tax assets. The projected reversal of temporary differences, the Domestication, and projected future operating income in the U.S. represents significant positive evidence, which outweighed the historical negative evidence. Based on this evidence, management determined it was more likely than not that the federal deferred tax assets are recoverable and released the associated $1.7 million valuation allowance as of March 31, 2019. The Company will continue to have a valuation allowance on deferred tax assets associated with state net operating loss carryforwards as they do not meet the “more likely than not” criteria due to the limited carryforward period. The amount of the deferred tax assets considered realizable could be adjusted if estimates of future taxable income during the carryforward period change or if objective negative evidence in the form of cumulative losses is no longer present. The tax expense for the three and nine months ended September 30, 2020 differs from the statutory rate of 21% due primarily to the tax impact of the permanent component of employee stock option exercises. For the three months ended September 30, 2019 differs from the statutory rate of 21% due to miscellaneous differences between taxable income calculated under GAAP and IRS regulations. The tax expense for the nine months ended September 30, 2019 differs significantly the statutory rate of 21% primarily due to a U.S. tax benefit of $1.7 million for the reversal of a significant portion of the Company’s U.S. deferred tax valuation allowance offset by tax expense of $4.8 million from an addback related to a nondeductible stock compensation charge incurred upon modification of the Company’s management incentive plan in March 2019.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

Stock-Based Compensation - 2019 Equity Incentive Plan (Details) - 2019 Equity Incentive Plan - shares	Sep. 30, 2020	Apr. 16, 2019
Stock-Based Compensation
Shares authorized (in shares)	1,970,618	2,400,000
Annual automatic increase to the number of shares of common stock reserved for issuance, as a percentage of common stock issued and outstanding as at the immediately preceding fiscal year end		3.00%

Fair Value Measurements - Transfers (Details) $ in Millions	9 Months Ended
Fair Value Measurements - Transfers (Details) $ in Millions	Sep. 30, 2020 USD ($)
Fair Value Measurements
Fair value, assets, transfers out of Level 3	$ 1.5

Investments - Contractual Maturities of Available for Sale Fixed Maturity Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Amortized Cost
Due within one year (remaining six months)	$ 11,521
Due within one year	0
Due after one year through five years	144,424
Due after five years through ten years	104,751
Due after ten years	36,819
Mortgage and asset-backed securities	80,143
Amortized Cost	377,658	$ 211,278
Fair Value
Due within one year (remaining six months)	11,650
Due within one year	0
Due after one year through five years	148,032
Due after five years through ten years	110,836
Due after ten years	37,705
Mortgage and asset-backed securities	82,588
Total	$ 390,811	$ 217,151

Reserve for Losses and Loss Adjustment Expenses - Total (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Jun. 30, 2020	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Dec. 31, 2018
Reserve for Losses and Loss Adjustment Expenses
Total reserve for losses and loss adjustment expenses	$ 39,540	$ 7,087	$ 3,869	$ 2,914	$ 1,428	$ 4,165
Add: Reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period	92,537		12,952	14,052
Reserve for losses and loss adjustment expenses gross of reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period	$ 132,077		$ 16,821	$ 16,966

Document and Entity Information - $ / shares	9 Months Ended
Document and Entity Information - $ / shares	Sep. 30, 2020	Nov. 09, 2020
Cover [Abstract]
Entity Central Index Key	0001761312
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2020
Document Transition Report	false
Entity File Number	001-38873
Entity Registrant Name	Palomar Holdings, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	83-3972551
Entity Address, Address Line One	7979 Ivanhoe Avenue
Entity Address, Address Line Two	Suite 500
Entity Address, City or Town	La Jolla
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92037
City Area Code	619
Local Phone Number	567-5290
Title of 12(b) Security	Common Stock, par value $0.0001 per share
Entity Listing, Par Value Per Share	$ 0.0001
Trading Symbol	PLMR
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	true
Entity Ex Transition Period	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		25,518,957
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Amendment Flag	false

Investments - Available for Sale Investments (Details) $ in Thousands	Sep. 30, 2020 USD ($) security	Dec. 31, 2019 USD ($) security
Available for sale investments
Number of unrealized loss positions \| security	145	51
Available for sale investments
Amortized Cost	$ 377,658	$ 211,278
Gross Unrealized Gains	14,757	5,990
Gross Unrealized Losses	(1,604)	(117)
Fair Value	390,811	217,151
Amortized Cost	43,071	21,336
Equity securities at fair value	45,037	22,328
U.S. Governments
Available for sale investments
Amortized Cost	15,809	13,371
Gross Unrealized Gains	844	321
Gross Unrealized Losses	(1)	(13)
Fair Value	16,652	13,679
States, territories, and possession
Available for sale investments
Amortized Cost	4,338	2,298
Gross Unrealized Gains	352	147
Gross Unrealized Losses	(18)
Fair Value	4,672	2,445
Political subdivisions
Available for sale investments
Amortized Cost	2,286	1,913
Gross Unrealized Gains	88	29
Fair Value	2,374	1,942
Special revenue excluding mortgage/asset-backed securities
Available for sale investments
Amortized Cost	36,075	18,139
Gross Unrealized Gains	1,099	343
Gross Unrealized Losses	(81)	(46)
Fair Value	37,093	18,436
Industrial and miscellaneous
Available for sale investments
Amortized Cost	239,007	124,726
Gross Unrealized Gains	9,575	4,326
Gross Unrealized Losses	(1,150)	(39)
Fair Value	247,432	129,013
Mortgage/asset-backed securities
Available for sale investments
Amortized Cost	80,143	50,831
Gross Unrealized Gains	2,799	824
Gross Unrealized Losses	(354)	(19)
Fair Value	$ 82,588	$ 51,636

Underwriting Information

9 Months Ended

Sep. 30, 2020

Underwriting Information

Underwriting Information

12. Underwriting Information

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


	Three Months Ended September 30,								Nine Months Ended September 30,
	2020				2019				2020				2019
	($ in thousands)								($ in thousands)
			% of				% of				% of				% of
	Amount		GWP		Amount		GWP		Amount		GWP		Amount		GWP
Product
Residential Earthquake	$	40,507	39.3	%	$	35,711	53.9	%	$	103,503	40.1	%	$	95,005	53.2	%
Commercial Earthquake		18,061	17.5	%		8,402	12.7	%		40,727	15.8	%		23,020	12.9	%
Specialty Homeowners		17,048	16.6	%		8,572	12.9	%		38,461	14.9	%		24,994	14.0	%
Commercial All Risk		12,467	12.1	%		7,077	10.7	%		39,765	15.4	%		21,929	12.3	%
Inland Marine		4,406	4.3	%		1,060	1.6	%		9,747	3.8	%		1,294	0.7	%
Hawaii Hurricane		4,360	4.2	%		3,299	5.0	%		10,296	4.0	%		8,048	4.5	%
Residential Flood		2,170	2.1	%		1,450	2.2	%		5,728	2.2	%		3,494	2.0	%
Other		3,948	3.9	%		671	1.0	%		10,041	3.8	%		835	0.4	%
Total Gross Written Premiums	$	102,967	100.0	%	$	66,242	100.0	%	$	258,268	100.0	%	$	178,619	100.0	%

Gross written premiums by state are as follows:


	Three Months Ended September 30,								Nine Months Ended September 30,
	2020				2019				2020				2019
	($ in thousands)								($ in thousands)
			% of				% of				% of				% of
	Amount		GWP		Amount		GWP		Amount		GWP		Amount		GWP
State
California	$	52,960	51.4	%	$	36,789	55.5	%	$	124,131	48.1	%	$	99,543	55.7	%
Texas		20,460	19.9	%		11,239	17.0	%		55,047	21.3	%		32,678	18.3	%
Hawaii		5,097	5.0	%		3,675	5.5	%		11,990	4.6	%		8,688	4.9	%
Washington		4,340	4.2	%		2,910	4.4	%		10,002	3.9	%		6,430	3.6	%
South Carolina		2,089	2.0	%		1,258	1.9	%		7,203	2.8	%		4,614	2.5	%
North Carolina		2,839	2.8	%		967	1.5	%		7,131	2.8	%		2,654	1.5	%
Oregon		2,912	2.8	%		2,153	3.3	%		7,298	2.8	%		5,279	3.0	%
Mississippi		2,173	2.1	%		1,315	2.0	%		5,628	2.2	%		3,383	1.9	%
Other		10,097	9.8	%		5,936	8.9	%		29,838	11.5	%		15,350	8.6	%
Total Gross Written Premiums	$	102,967	100.0	%	$	66,242	100.0	%	$	258,268	100.0	%	$	178,619	100.0	%

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8924-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 34
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8981-108599

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 21
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8721-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9031-108599

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (f)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 26
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8844-108599

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9038-108599

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9054-108599

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8657-108599

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 21
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8721-108599

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-URI http://asc.fasb.org/topic&trid=2134510

+ Details

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Condensed Consolidated Balance Sheets
Fixed maturity securities available for sale, amortized cost	$ 377,658	$ 211,278
Equity securities, cost	$ 43,071	$ 21,336
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	500,000,000	500,000,000
Common stock, shares issued (in shares)	25,518,957	23,468,750
Common stock, shares outstanding (in shares)	25,518,957	23,468,750

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Operating activities
Net cash provided by operating activities	$ 44,170	$ 35,659
Investing activities
Purchases of property and equipment	(84)	(72)
Purchases of fixed maturity securities	(251,504)	(181,446)
Purchases of equity securities	(46,340)	(58,735)
Sales and maturities of fixed maturity securities	84,663	87,541
Sales of equity securities	24,662	64,820
Securities receivable or payable, net	(2,748)	(3,081)
Net cash used in investing activities	(191,351)	(90,973)
Financing activities
Proceeds from initial public offering, net of offering costs		87,412
Redemption of Floating Rate Notes		(20,000)
Distribution to stockholder		(5,120)
Proceeds from common stock issued via employee stock purchase plan	741
Proceeds from common stock issued via stock option exercises	1,740
Net cash provided by financing activities	128,028	62,292
Net increase (decrease) in cash, cash equivalents and restricted cash	(19,153)	6,978
Cash, cash equivalents and restricted cash at beginning of period	33,349	9,924
Cash, cash equivalents and restricted cash at end of period	14,196	16,902
Supplementary cash flow information:
Cash paid for income taxes	7,053
Cash paid for interest		$ 1,162
Stock Issued in January
Financing activities
Proceeds from stock offering, net of offering costs	35,464
Stock Issued in June
Financing activities
Proceeds from stock offering, net of offering costs	$ 90,083

Fair Value Measurements - Financial Assets and Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Assets:
Fair Value	$ 390,811	$ 217,151
Equity securities at fair value	45,037	22,328
U.S. Governments
Assets:
Fair Value	16,652	13,679
States, territories, and possession
Assets:
Fair Value	4,672	2,445
Political subdivisions
Assets:
Fair Value	2,374	1,942
Special revenue excluding mortgage/asset-backed securities
Assets:
Fair Value	37,093	18,436
Industrial and miscellaneous
Assets:
Fair Value	247,432	129,013
Mortgage/asset-backed securities
Assets:
Fair Value	82,588	51,636
Fair Value, Measurements, Recurring
Assets:
Equity securities at fair value	45,037	22,328
Cash, cash equivalents, and restricted cash	14,196	33,349
Total assets	450,044	272,828
Fair Value, Measurements, Recurring \| U.S. Governments
Assets:
Fair Value	16,652	13,679
Fair Value, Measurements, Recurring \| States, territories, and possession
Assets:
Fair Value	4,672	2,445
Fair Value, Measurements, Recurring \| Political subdivisions
Assets:
Fair Value	2,374	1,942
Fair Value, Measurements, Recurring \| Special revenue excluding mortgage/asset-backed securities
Assets:
Fair Value	37,093	18,436
Fair Value, Measurements, Recurring \| Industrial and miscellaneous
Assets:
Fair Value	247,432	129,013
Fair Value, Measurements, Recurring \| Mortgage/asset-backed securities
Assets:
Fair Value	82,588	51,636
Fair Value, Measurements, Recurring \| Fair Value, Inputs, Level 1
Assets:
Equity securities at fair value	45,037
Cash, cash equivalents, and restricted cash	14,196	28,350
Total assets	59,233	28,350
Fair Value, Measurements, Recurring \| Fair Value, Inputs, Level 2
Assets:
Equity securities at fair value		22,328
Cash, cash equivalents, and restricted cash		4,999
Total assets	390,811	242,978
Fair Value, Measurements, Recurring \| Fair Value, Inputs, Level 2 \| U.S. Governments
Assets:
Fair Value	16,652	13,679
Fair Value, Measurements, Recurring \| Fair Value, Inputs, Level 2 \| States, territories, and possession
Assets:
Fair Value	4,672	2,445
Fair Value, Measurements, Recurring \| Fair Value, Inputs, Level 2 \| Political subdivisions
Assets:
Fair Value	2,374	1,942
Fair Value, Measurements, Recurring \| Fair Value, Inputs, Level 2 \| Special revenue excluding mortgage/asset-backed securities
Assets:
Fair Value	37,093	18,436
Fair Value, Measurements, Recurring \| Fair Value, Inputs, Level 2 \| Industrial and miscellaneous
Assets:
Fair Value	247,432	129,013
Fair Value, Measurements, Recurring \| Fair Value, Inputs, Level 2 \| Mortgage/asset-backed securities
Assets:
Fair Value	82,588	50,136
Fair Value, Measurements, Recurring \| Fair Value, Inputs, Level 3
Assets:
Total assets		1,500
Fair Value, Measurements, Recurring \| Fair Value, Inputs, Level 3 \| Mortgage/asset-backed securities
Assets:
Fair Value	$ 0	$ 1,500

Reserve for Losses and Loss Adjustment Expenses (Tables)

9 Months Ended

Sep. 30, 2020

Reserve for Losses and Loss Adjustment Expenses

Schedule of reconciliation of the beginning and ending reserve balances for losses and LAE on a net of reinsurance basis to the gross amounts


	Three months ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
		(in thousands)				(in thousands)
Reserve for losses and loss adjustment expenses net of reinsurance recoverables at beginning of period	$	7,087	$	1,428	$	3,869	$	4,165
Add: Incurred losses and loss adjustment expenses, net of reinsurance, related to:
Current year		40,803		2,647		46,867		3,660
Prior years		257		(208)		34		(262)
Total incurred		41,060		2,439		46,901		3,398
Deduct: Loss and loss adjustment expense payments, net of reinsurance, related to:
Current year		8,232		641		9,754		1,044
Prior years		375		312		1,476		3,605
Total payments		8,607		953		11,230		4,649
Reserve for losses and loss adjustment expense net of reinsurance recoverables at end of period		39,540		2,914		39,540		2,914
Add: Reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period		92,537		14,052		92,537		14,052
Reserve for losses and loss adjustment expenses gross of reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period	$	132,077	$	16,966	$	132,077	$	16,966

Investments - Security Holdings in an Unrealized Loss Position - Tabular Disclosure (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Fair Value
Fair Value - Less Than 12 Months	$ 96,287	$ 18,747
Fair Value - More Than 12 Months	1	2,197
Fair Value - Total	96,288	20,944
Unrealized Losses
Unrealized Losses - Less Than 12 Months	(1,604)	(114)
Unrealized Losses - More Than 12 Months		(3)
Unrealized Losses - Total	(1,604)	(117)
U.S. Governments
Fair Value
Fair Value - Less Than 12 Months	500	1,235
Fair Value - More Than 12 Months		1,827
Fair Value - Total	500	3,062
Unrealized Losses
Unrealized Losses - Less Than 12 Months	(1)	(11)
Unrealized Losses - More Than 12 Months		(2)
Unrealized Losses - Total	(1)	(13)
States, territories, and possession
Fair Value
Fair Value - Less Than 12 Months	1,490
Fair Value - Total	1,490
Unrealized Losses
Unrealized Losses - Less Than 12 Months	(18)
Unrealized Losses - Total	(18)
Special revenue excluding mortgage/asset-backed securities
Fair Value
Fair Value - Less Than 12 Months	7,893	3,548
Fair Value - Total	7,893	3,548
Unrealized Losses
Unrealized Losses - Less Than 12 Months	(81)	(46)
Unrealized Losses - Total	(81)	(46)
Industrial and miscellaneous
Fair Value
Fair Value - Less Than 12 Months	64,592	6,929
Fair Value - More Than 12 Months		188
Fair Value - Total	64,592	7,117
Unrealized Losses
Unrealized Losses - Less Than 12 Months	(1,150)	(38)
Unrealized Losses - More Than 12 Months		(1)
Unrealized Losses - Total	(1,150)	(39)
Mortgage/asset-backed securities
Fair Value
Fair Value - Less Than 12 Months	21,812	7,035
Fair Value - More Than 12 Months	1	182
Fair Value - Total	21,813	7,217
Unrealized Losses
Unrealized Losses - Less Than 12 Months	(354)	(19)
Unrealized Losses - Total	$ (354)	$ (19)

Accumulated Other Comprehensive Income

9 Months Ended

Sep. 30, 2020

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income

9. Accumulated Other Comprehensive Income

Changes in accumulated other comprehensive income (“AOCI”) are as follows:


	Nine Months Ended September 30,
	2020		2019
		(in thousands)
Beginning Balance	$	4,686	$	(563)
Other comprehensive income before reclassification		7,494		8,090
Federal income tax expense		(1,573)		(1,666)
Other comprehensive income before reclassification, net of tax		5,921		6,424
Amounts reclassified from AOCI		(214)		44
Federal income tax expense		45		(9)
Amounts reclassified from AOCI, net of tax		(169)		35
Other comprehensive income		5,752		6,459
Balance at end of period	$	10,438	$	5,896

Capital Stock (Tables)

9 Months Ended

Sep. 30, 2020

Capital Stock

Schedule of common stock reserved for future issuance


Stock options outstanding under 2019 Equity Incentive Plan	996,870
Restricted stock units outstanding under 2019 Equity Incentive Plan	14,734
Shares authorized for future issuance under 2019 Equity Incentive Plan	1,970,618
Shares authorized for future issuance under 2019 Employee Stock Purchase Plan	451,633
Total	3,433,855

Stock-Based Compensation

9 Months Ended

Sep. 30, 2020

Stock-Based Compensation

Stock-Based Compensation

8. Stock-Based Compensation

The below table summarizes the Company’s stock-based compensation expense for each period presented:


	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019
	(in thousands)				(in thousands)
Stock-Based Compensation	$	551	$	410	$	1,457	$	23,677

Stock-based compensation expense is recognized on a straight-line basis over the vesting period of equity-based awards. The Company does not apply a forfeiture rate to unvested awards and accounts for forfeitures as they occur. All stock-based compensation is included in other underwriting expenses in the Company’s unaudited condensed consolidated statement of income (loss) and comprehensive income (loss).

The Company recognized approximately $23.0 million of stock-based compensation expense in March 2019 relating to the modification of its 2014 Management Incentive Plan. The Company began recognizing stock-based compensation expense relating to its 2019 Equity Incentive Plan and the 2019 Employee Stock Purchase Plan upon their inception and initial stock grants in April 2019 and all stock based compensation expense recognized subsequent to April 2019 relates to the 2019 Equity Incentive Plan and 2019 Employee Stock Purchase Plan.

Management Incentive Plan prior to IPO

The Company’s former parent, GC Palomar Investor LP, adopted a 2014 Management Incentive Plan (in the form of profits interests) on February 12, 2014 under which certain officers and employees of PSIC and its affiliates were entitled to Class P Units in GC Palomar Investor LP. Class P unit holders were expected to realize value only upon the occurrence of liquidity events meeting requisite financial thresholds after the Class A unit holders recovered their investment. The Class P unit holders had no voting rights. The Company did not record stock-based compensation expense related to this plan prior to 2019 because no liquidity events were probable of occurring.

On March 15, 2019, the Company modified its 2014 Management Incentive Plan by eliminating the requirement of a liquidity event to occur for the holders of its Class P units to realize value. The 12,552,825 Class P units outstanding were modified such that the vesting of each Class P unit holder’s awards was accelerated and their Class P distribution percentages were determined and distributed based on these percentages. This modification resulted in a stock compensation charge and corresponding increase to additional paid‑in capital of $23.0 million during the quarter ending March 31, 2019.

2019 Equity Incentive Plan

On April 16, 2019, the Company's 2019 Equity Incentive Plan (“the 2019 Plan”) became effective. The 2019 Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance shares and units, and other cash-based or share-based awards. In addition, the 2019 Plan contains a mechanism through which the Company may adopt a deferred compensation arrangement in the future.

A total of 2,400,000 shares of common stock were initially authorized and reserved for issuance under the 2019 Plan. This reserve increases on January 1 of each year through 2029 by an amount equal to the smaller of: 3% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or an amount determined by the board of directors.

Stock Options

Recipients of stock options can purchase shares of the Company’s common stock at a price equal to the stock's fair market value on the grant date, determined by the closing price of the Company's stock on the grant date. Stock options vest over a two or four-year period with 25% or 50% vesting on the first anniversary of the grant date and the remainder vesting monthly over the remaining period, subject to continued employment. Stock options expire ten years after the grant date.

The following table summarizes stock option transactions for the 2019 Plan for the nine months ended September 30, 2020:


	Number of shares		Weighted-average exercise price	Weighted average remaining contractual term (in years)		Aggregate intrinsic value (in thousands)
Outstanding at December 31, 2019	1,046,373	$	17.05	9.33	$	35,039
Options granted	90,757		80.43
Options exercised	(115,774)		15.03
Options canceled	(24,486)		21.46
Outstanding at September 30, 2020	996,870	$	22.95	8.68	$	81,128
Vested and Exercisable at September 30, 2020	422,203	$	15.07	8.54	$	37,649

As of September 30, 2020, the Company had approximately $3.7 million of total unrecognized stock-based compensation expense related to stock options expected to be recognized over a weighted-average period of 2.27 years.

The fair value of each option granted during the nine months ended September 30, 2020 was estimated on the grant date using the Black-Scholes option pricing model with the following assumptions:


Risk free rate of return (1)	0.32% - 1.52%
Expected share price volatility (2)	18.13% - 25.12%
Expected life in years (3)	5.63 - 6.08 years
Dividend yield (4)	0%

(1) Determined based on the U.S. Treasury yield in effect at the time of the grant for zero-coupon U.S. Treasury notes with remaining terms similar to the expected term of the options.

(2) Determined based on analysis of the volatility of a peer group of publicly traded companies.

(3) Determined using the “simplified method” for estimating the expected option life, which is the average of the weighted-average vesting period and contractual term of the option as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time its common stock has been publicly traded.

(4) Determined to be zero as the Company has not historically issued dividends.

Restricted Stock Units

Restricted stock units are valued on their grant date and generally vest either on the first anniversary of the grant date or over a three-year period with one third vesting on each anniversary date, subject to continued service. The fair value of RSUs is determined using the closing price of the Company's common stock on the grant date.

The following table summarizes RSU transactions for the 2019 Plan for the nine months ended September 30, 2020:


	Number of shares		Weighted-average grant date fair value
Non vested outstanding at December 31, 2019	6,066	$	16.49
Granted	14,734		95.86
Vested	(6,066)		16.49
Forfeited	—		—
Non vested outstanding at September 30, 2020	14,734	$	95.86

As of September 30, 2020, the Company had approximately $1.3 million of total unrecognized stock-based compensation expense related to RSUs expected to be recognized over a weighted-average period of 2.66 years.

2019 Employee Stock Purchase Plan

On April 16, 2019, the Company's 2019 Employee Stock Purchase Plan (“the 2019 ESPP”) became effective. A total of 240,000 shares of common stock are initially authorized and reserved for issuance under the 2019 ESPP. In addition, the 2019 ESPP provides for annual increases in the number of shares available for issuance on January 1 of each year through 2029, equal to the smaller of 240,000 shares of the Company’s common stock or such other amount as may be determined by the board of directors.

Under the 2019 ESPP, employees can purchase Company stock at a discount via payroll withholdings. The 2019 ESPP is administered through employee participation in discrete offering periods. During each discrete offering period employee funds are withheld, and the stock purchase occurs upon the conclusion of the offering period. The Company issued 28,367 shares pursuant to the ESPP during the nine months ended September 30, 2020.

Summary of Operations and Basis of Presentation (Policies)	9 Months Ended
	Sep. 30, 2020
Summary of Operation and Basis of Presentation
Basis of Presentation	Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and include the accounts of the Company and its wholly‑owned subsidiaries. These condensed consolidated financial statements do not contain all information and footnotes required by U.S. GAAP for complete consolidated financial statements. For a more complete description of the Company’s business and accounting policies, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. In the opinion of management, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included. Such adjustments consist only of normal recurring items. All intercompany balances and transactions have been eliminated in consolidation. Interim results are not necessarily indicative of results of operations for the full year.
Stock Split	On March 15, 2019, the Company effected a 17,000,000 for one forward stock split in conjunction with domestication in the United States. All share and per share information included in the condensed consolidated financial statements and notes to the condensed consolidated financial statements have been retroactively adjusted to reflect the stock split for the Company’s common stock for all periods presented.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the condensed consolidated financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein. All revisions to accounting estimates are recognized in the period in which the estimates are revised. Significant estimates reflected in the Company’s condensed consolidated financial statements include, but are not limited to, reserves for losses and loss adjustment expenses, reinsurance recoverables on unpaid losses, and the fair values of investments.
Recent Accounting Pronouncements	Recent Accounting Pronouncements The Company currently qualifies as an emerging growth company (“EGC”) under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. The Company is currently electing to adopt new or revised accounting guidance within the same time periods as private companies as permitted by its status as an EGC. Based on the market value of the Company’s common stock held by non-affiliates as of the last business day of its second fiscal quarter, the Company will become a large accelerated filer on December 31, 2020 and will no longer be permitted to adopt guidance within the same time periods as private companies at that time. Recently adopted accounting pronouncements In August 2018, the FASB issued “ASU 2018‑13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” Among other things, this new guidance eliminates the need to disclose transfers between Level 1 and Level 2 of the fair value hierarchy, changes the policy for timing of transfers and the valuation processes for Level 3 fair value measurements and includes requirements to disclose quantitative information about Level 3 measurements. The Company adopted this guidance on January 1, 2020 and adoption did not have an impact on the Company’s consolidated financial statements. The Company will continue to monitor the composition of its investment portfolio and will make appropriate disclosures based on this guidance. Recently issued accounting pronouncements not yet adopted In February 2016, the FASB issued new guidance for accounting for leases, “ASU 2016‑02, Leases (Topic 842).” Under current guidance, leases are only included on the balance sheet if the criteria to classify the agreement as a capital lease are met. This update will require the recognition of a right‑of‑use asset and a corresponding lease liability, discounted to the present value, for all leases that extend beyond 12 months. This guidance was subsequently amended multiple times and offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This new guidance requires a modified retrospective adoption, applying the new standard to all leases existing at the date of initial application, with early adoption permitted. An entity may choose to use the standard’s effective date, rather than the beginning of the earliest comparative period presented, as the date of initial application. An entity would record the effects of initially applying the new guidance as a cumulative‑effect adjustment to retained earnings. Consequently, an entity’s reporting for the comparative periods presented in the year of adoption would continue to be in accordance with the current guidance, including the current disclosure requirements. To facilitate transition, the new guidance includes a package of practical expedients that entities may elect to apply on adoption. The package of practical expedients relates to the identification and classification of leases and initial direct costs for leases that commenced before the effective date. The new guidance also includes a practical expedient permitting the use of hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. The Company will adopt this guidance for annual reporting on December 31, 2020 and will account for leases under this guidance beginning with its 2020 Annual Report on Form 10-K. The Company will adopt this guidance for quarterly reporting beginning the first quarter of fiscal year 2021. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements. In June 2016, the FASB issued “ASU 2016‑13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” Current guidance delays the recognition of credit losses until it is probable a loss has been incurred. This updated guidance will require financial assets measured at amortized cost to be presented at the net amount expected to be collected by means of an allowance for credit losses that runs through net income. Credit losses relating to available‑for‑sale debt securities will also be recorded through an allowance for credit losses, with the amount of the allowance limited to the amount by which fair value is below amortized cost. In 2019, the FASB issued amendments to this guidance which provide an option to irrevocably elect to measure certain individual financial assets at fair value instead of amortized cost and provide additional clarification and implementation guidance. The Company will adopt this guidance for annual reporting on December 31, 2020 and will account for potential credit losses under this guidance beginning with its 2020 Annual Report on Form 10-K. The Company will adopt this guidance for quarterly reporting beginning the first quarter of fiscal year 2021. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements.

Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Revenues:
Gross written premiums	$ 102,967	$ 66,242	$ 258,268	$ 178,619
Ceded written premiums	(41,570)	(28,060)	(101,264)	(78,797)
Net written premiums	61,397	38,182	157,004	99,822
Change in unearned premiums	(19,377)	(10,520)	(40,859)	(30,602)
Net earned premiums	42,020	27,662	116,145	69,220
Net investment income	2,138	1,729	6,287	4,172
Net realized and unrealized gains on investments	24	361	1,243	3,265
Commission and other income	816	709	2,492	2,017
Total revenues	44,998	30,461	126,167	78,674
Expenses:
Losses and loss adjustment expenses	41,060	2,439	46,901	3,398
Acquisition expenses	17,976	10,243	45,909	26,189
Other underwriting expenses (includes stock-based compensation of $551 and $410 for the three months ended September 30, 2020 and 2019, respectively and $1,457 and $23,677 for the nine months ended September 30, 2020 and 2019, respectively)	7,805	8,330	24,732	44,348
Interest expense				1,068
Total expenses	66,841	21,012	117,542	75,003
Income (loss) before income taxes	(21,843)	9,449	8,625	3,671
Income tax expense (benefit)	(6,158)	1,995	523	3,929
Net income (loss)	(15,685)	7,454	8,102	(258)
Other comprehensive income, net:
Net unrealized gains on securities available for sale for the three and nine months ended September 30, 2020 and 2019, respectively	909	974	5,752	6,459
Net comprehensive income (loss)	$ (14,776)	$ 8,428	$ 13,854	$ 6,201
Per Share Data:
Basic earnings per share (in dollars per share)	$ (0.62)	$ 0.32	$ 0.33	$ (0.01)
Diluted earnings per share (in dollars per share)	$ (0.62)	$ 0.31	$ 0.32	$ (0.01)
Weighted-average common shares outstanding:
Basic (in shares)	25,492,274	23,468,750	24,654,722	20,838,599
Diluted (in shares)	25,492,274	23,885,137	25,384,518	20,838,599

Stock-Based Compensation - Fair Value Assumptions (Details) - Stock Options	9 Months Ended
	Sep. 30, 2020
Fair value assumptions
Risk free rate of return, minimum (as a percent)	0.32%
Risk free rate of return, maximum (as a percent)	1.52%
Expected share price volatility, minimum (as a percent)	18.13%
Expected share price volatility, maximum (as a percent)	25.12%
Dividend yield (as a percent)	0.00%
Minimum
Fair value assumptions
Expected life in years	5 years 7 months 17 days
Maximum
Fair value assumptions
Expected life in years	6 years 29 days

Cash Distribution	9 Months Ended
Cash Distribution	Sep. 30, 2020
Cash Distribution
Cash Distribution	11. Cash Distribution In March 2019, the Company made a one‑time cash distribution totaling approximately $5.1 million to its then‑sole stockholder, GC Palomar Investor LP, enabling it to distribute funds to its partners in order to allow such partners to satisfy tax obligations incurred as a result of the Domestication transactions.

Stock-Based Compensation - 2019 Employee Stock Purchase Plan (Details) - shares	9 Months Ended
	Sep. 30, 2020	Dec. 31, 2020	Apr. 16, 2019
Stock-Based Compensation
Issuance of common stock via employee stock purchase plan (in shares)	28,367
Employee Stock
Stock-Based Compensation
Shares authorized (in shares)	451,633		240,000
Annual increase (in shares)		240,000

Accumulated Other Comprehensive Income (Tables)

9 Months Ended

Sep. 30, 2020

Accumulated Other Comprehensive Income

Schedule of changes in accumulated other comprehensive income (AOCI)


	Nine Months Ended September 30,
	2020		2019
		(in thousands)
Beginning Balance	$	4,686	$	(563)
Other comprehensive income before reclassification		7,494		8,090
Federal income tax expense		(1,573)		(1,666)
Other comprehensive income before reclassification, net of tax		5,921		6,424
Amounts reclassified from AOCI		(214)		44
Federal income tax expense		45		(9)
Amounts reclassified from AOCI, net of tax		(169)		35
Other comprehensive income		5,752		6,459
Balance at end of period	$	10,438	$	5,896

Summary of Operations and Basis of Presentation	9 Months Ended
Summary of Operations and Basis of Presentation	Sep. 30, 2020
Summary of Operations and Basis of Presentation
Summary of Operations and Basis of Presentation	1. Summary of Operations and Basis of Presentation Summary of Operations Palomar Holdings, Inc. (“the Company”) is a Delaware incorporated insurance holding company that was founded in 2014. The Company has several wholly owned subsidiaries including an Oregon domiciled insurance company, Palomar Specialty Insurance Company (“PSIC”), a Bermuda based reinsurance company, Palomar Specialty Reinsurance Company Bermuda Ltd. (“PSRE”), an Arizona domiciled surplus lines insurance company, Palomar Excess and Surplus Insurance Company (“PESIC”), and a California domiciled property and casualty insurance agency, Palomar Insurance Agency, DBA Palomar General Insurance Agency (“PGIA”). Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and include the accounts of the Company and its wholly‑owned subsidiaries. These condensed consolidated financial statements do not contain all information and footnotes required by U.S. GAAP for complete consolidated financial statements. For a more complete description of the Company’s business and accounting policies, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. In the opinion of management, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included. Such adjustments consist only of normal recurring items. All intercompany balances and transactions have been eliminated in consolidation. Interim results are not necessarily indicative of results of operations for the full year. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the condensed consolidated financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein. All revisions to accounting estimates are recognized in the period in which the estimates are revised. Significant estimates reflected in the Company’s condensed consolidated financial statements include, but are not limited to, reserves for losses and loss adjustment expenses, reinsurance recoverables on unpaid losses, and the fair values of investments. Recent Accounting Pronouncements The Company currently qualifies as an emerging growth company (“EGC”) under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. The Company is currently electing to adopt new or revised accounting guidance within the same time periods as private companies as permitted by its status as an EGC. Based on the market value of the Company’s common stock held by non-affiliates as of the last business day of its second fiscal quarter, the Company will become a large accelerated filer on December 31, 2020 and will no longer be permitted to adopt guidance within the same time periods as private companies at that time. Recently adopted accounting pronouncements In August 2018, the FASB issued “ASU 2018‑13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.” Among other things, this new guidance eliminates the need to disclose transfers between Level 1 and Level 2 of the fair value hierarchy, changes the policy for timing of transfers and the valuation processes for Level 3 fair value measurements and includes requirements to disclose quantitative information about Level 3 measurements. The Company adopted this guidance on January 1, 2020 and adoption did not have an impact on the Company’s consolidated financial statements. The Company will continue to monitor the composition of its investment portfolio and will make appropriate disclosures based on this guidance. Recently issued accounting pronouncements not yet adopted In February 2016, the FASB issued new guidance for accounting for leases, “ASU 2016‑02, Leases (Topic 842).” Under current guidance, leases are only included on the balance sheet if the criteria to classify the agreement as a capital lease are met. This update will require the recognition of a right‑of‑use asset and a corresponding lease liability, discounted to the present value, for all leases that extend beyond 12 months. This guidance was subsequently amended multiple times and offers specific accounting guidance for a lessee, a lessor and sale and leaseback transactions. Lessees and lessors are required to disclose qualitative and quantitative information about leasing arrangements to enable a user of the financial statements to assess the amount, timing and uncertainty of cash flows arising from leases. This new guidance requires a modified retrospective adoption, applying the new standard to all leases existing at the date of initial application, with early adoption permitted. An entity may choose to use the standard’s effective date, rather than the beginning of the earliest comparative period presented, as the date of initial application. An entity would record the effects of initially applying the new guidance as a cumulative‑effect adjustment to retained earnings. Consequently, an entity’s reporting for the comparative periods presented in the year of adoption would continue to be in accordance with the current guidance, including the current disclosure requirements. To facilitate transition, the new guidance includes a package of practical expedients that entities may elect to apply on adoption. The package of practical expedients relates to the identification and classification of leases and initial direct costs for leases that commenced before the effective date. The new guidance also includes a practical expedient permitting the use of hindsight in evaluating lessee options to extend or terminate a lease or to purchase the underlying asset. The Company will adopt this guidance for annual reporting on December 31, 2020 and will account for leases under this guidance beginning with its 2020 Annual Report on Form 10-K. The Company will adopt this guidance for quarterly reporting beginning the first quarter of fiscal year 2021. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements. In June 2016, the FASB issued “ASU 2016‑13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments.” Current guidance delays the recognition of credit losses until it is probable a loss has been incurred. This updated guidance will require financial assets measured at amortized cost to be presented at the net amount expected to be collected by means of an allowance for credit losses that runs through net income. Credit losses relating to available‑for‑sale debt securities will also be recorded through an allowance for credit losses, with the amount of the allowance limited to the amount by which fair value is below amortized cost. In 2019, the FASB issued amendments to this guidance which provide an option to irrevocably elect to measure certain individual financial assets at fair value instead of amortized cost and provide additional clarification and implementation guidance. The Company will adopt this guidance for annual reporting on December 31, 2020 and will account for potential credit losses under this guidance beginning with its 2020 Annual Report on Form 10-K. The Company will adopt this guidance for quarterly reporting beginning the first quarter of fiscal year 2021. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements.

Fair Value Measurements

9 Months Ended

Sep. 30, 2020

Fair Value Measurements

Fair value measurements

3. Fair Value Measurements

Fair value is defined as the price that the Company would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market of the investment.

The three‑tier hierarchy of inputs is summarized in the three broad levels listed below:

Level 1—Unadjusted quoted prices are available in active markets for identical investments as of the reporting date.

Level 2—Pricing inputs are quoted prices for similar investments in active markets; quoted prices for identical or similar investments in inactive markets; or valuations based on models where the significant inputs are observable or can be corroborated by observable market data.

Level 3—Pricing inputs into models are unobservable for the investment. The unobservable inputs require significant management judgment or estimation.

To measure fair value, the Company obtains quoted market prices for its investment securities from its outside investment managers. If a quoted market price is not available, the Company uses prices of similar securities. The fair values obtained from the outside investment managers are reviewed for reasonableness and any discrepancies are investigated for final valuation.

The fair value of the Company’s investments in fixed maturity securities is estimated using relevant inputs, including available market information, benchmark curves, benchmarking of like securities, sector groupings, and matrix pricing. An Option Adjusted Spread model is also used to develop prepayment and interest rate scenarios. Industry standard models are used to analyze and value securities with embedded options or prepayment sensitivities. These fair value measurements are estimated based on observable, objectively verifiable market information rather than market quotes. Therefore, these investments are classified and disclosed in Level 2 of the hierarchy.

The following tables present the Company’s fair value hierarchy for financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2020 and December 31, 2019.


September 30, 2020	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Fixed maturity securities
U.S. Governments	$	—	$	16,652	$	—	$	16,652
States, territories, and possessions		—		4,672		—		4,672
Political subdivisions		—		2,374		—		2,374
Special revenue excluding mortgage/asset-backed securities		—		37,093		—		37,093
Industrial and miscellaneous		—		247,432		—		247,432
Mortgage/asset-backed securities		—		82,588		—		82,588
Equity securities		45,037		—		—		45,037
Cash, cash equivalents, and restricted cash		14,196		—		—		14,196
Total assets	$	59,233	$	390,811	$	—	$	450,044


December 31, 2019	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
Fixed maturity securities
U.S. Governments	$	—	$	13,679	$	—	$	13,679
States, territories, and possessions		—		2,445		—		2,445
Political subdivisions		—		1,942		—		1,942
Special revenue excluding mortgage/asset-backed securities		—		18,436		—		18,436
Industrial and miscellaneous		—		129,013		—		129,013
Mortgage/asset-backed securities		—		50,136		1,500		51,636
Equity securities		—		22,328		—		22,328
Cash, cash equivalents, and restricted cash		28,350		4,999		—		33,349
Total assets	$	28,350	$	242,978	$	1,500	$	272,828

The carrying amounts of financial assets and liabilities reported in the accompanying condensed consolidated balance sheet including cash and cash equivalents, restricted cash, receivables, reinsurance recoverable, and accounts payable and other accrued liabilities approximate fair value due to their short term‑maturity.

Transfers between Level 3 and Level 2 securities result from changes in the availability of market observable inputs and are recorded at the beginning of the reporting period. As of September 30, 2020, the Company had no fixed income securities classified as Level 3. As of December 31, 2019, the Company had $1.5 million of fixed income securities classified as Level 3 due to the availability of market observable inputs which were transferred to Level 2 during the nine months ended September 30, 2020.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Stock-Based Compensation - Restricted Stock Units - Activity (Details) - Restricted Stock Units	9 Months Ended
	Sep. 30, 2020 $ / shares shares
Number of shares
Non vested outstanding at beginning of period (in shares) \| shares	6,066
Granted (in shares) \| shares	14,734
Vested (in shares) \| shares	(6,066)
Non vested at end of period (in shares) \| shares	14,734
Weighted-average grant date fair value
Non vested outstanding at beginning of period (in dollars per share) \| $ / shares	$ 16.49
Granted (in dollars per share) \| $ / shares	95.86
Vested (in dollars per share) \| $ / shares	16.49
Non vested outstanding at end of period (in dollars per share) \| $ / shares	$ 95.86

Income Taxes - Excise Tax (Details) $ in Millions	9 Months Ended
Income Taxes - Excise Tax (Details) $ in Millions	Sep. 30, 2020 USD ($)
Income Taxes
Federal excise tax rate (as a percent)	1.00%
Change in valuation allowance	$ 1.7

Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2020

Earnings Per Share

Schedule of net income per share of common stock


	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019
	(in thousands, except shares and per share data)				(in thousands, except shares and per share data)
Net income (loss)	$	(15,685)	$	7,454	$	8,102	$	(258)
Weighted average common shares outstanding:
Basic		25,492,274		23,468,750		24,654,722		20,838,599
Common Share equivalents		—		416,387		729,796		—
Diluted		25,492,274		23,885,137		25,384,518		20,838,599

Earnings per share:
Basic	$	(0.62)	$	0.32	$	0.33	$	(0.01)
Diluted	$	(0.62)	$	0.31	$	0.32	$	(0.01)

Stock-Based Compensation - Unrecognized Compensation Expense (Details) $ in Millions	9 Months Ended
	Sep. 30, 2020 USD ($)
Stock Options
Unrecognized stock-based compensation expense
Total unrecognized stock-based compensation expense, options	$ 3.7
Weighted-average period over which unrecognized stock-based compensation expense is expected to be recognized	2 years 3 months 7 days
Restricted Stock Units
Unrecognized stock-based compensation expense
Total unrecognized stock-based compensation expense, restricted stock units	$ 1.3
Weighted-average period over which unrecognized stock-based compensation expense is expected to be recognized	2 years 7 months 28 days

Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2020

Stock-Based Compensation

Schedule of Company's stock-based compensation expense


	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019
	(in thousands)				(in thousands)
Stock-Based Compensation	$	551	$	410	$	1,457	$	23,677

Schedule of stock option transactions


	Number of shares		Weighted-average exercise price	Weighted average remaining contractual term (in years)		Aggregate intrinsic value (in thousands)
Outstanding at December 31, 2019	1,046,373	$	17.05	9.33	$	35,039
Options granted	90,757		80.43
Options exercised	(115,774)		15.03
Options canceled	(24,486)		21.46
Outstanding at September 30, 2020	996,870	$	22.95	8.68	$	81,128
Vested and Exercisable at September 30, 2020	422,203	$	15.07	8.54	$	37,649

Schedule of fair value of each option granted was estimated on the grant date using the Black-Scholes option pricing model


Risk free rate of return (1)	0.32% - 1.52%
Expected share price volatility (2)	18.13% - 25.12%
Expected life in years (3)	5.63 - 6.08 years
Dividend yield (4)	0%

(1) Determined based on the U.S. Treasury yield in effect at the time of the grant for zero-coupon U.S. Treasury notes with remaining terms similar to the expected term of the options.

(2) Determined based on analysis of the volatility of a peer group of publicly traded companies.

(4) Determined to be zero as the Company has not historically issued dividends.

Schedule of restricted stock unit transactions


	Number of shares		Weighted-average grant date fair value
Non vested outstanding at December 31, 2019	6,066	$	16.49
Granted	14,734		95.86
Vested	(6,066)		16.49
Forfeited	—		—
Non vested outstanding at September 30, 2020	14,734	$	95.86

Condensed Consolidated Statements of Shareholder’s Equity - USD ($) $ in Thousands	Common Stock Stock Issued in January	Common Stock Stock Issued in June	Common Stock	Additional Paid-In Capital Stock Issued in January	Additional Paid-In Capital Stock Issued in June	Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Stock Issued in January	Stock Issued in June	Total
Beginning balance at Dec. 31, 2018			$ 2			$ 68,498	$ (563)	$ 28,355			$ 96,292
Beginning balance (in shares) at Dec. 31, 2018			17,000,000
Changes in Stockholders’ Equity
Other comprehensive income, net of tax							6,459				6,459
Distribution to stockholder								(5,120)			(5,120)
Stock-based compensation						23,677					23,677
Issuance of common stock in stock offering, net of offering cost						87,412					87,412
Issuance of common stock in stock offering, net of offering costs (in shares)			6,468,750
Net income (loss)								(258)			(258)
Ending balance at Sep. 30, 2019			$ 2			179,587	5,896	22,977			208,462
Ending balance (in shares) at Sep. 30, 2019			23,468,750
Beginning balance at Dec. 31, 2019			$ 2			180,012	4,686	33,856			$ 218,556
Beginning balance (in shares) at Dec. 31, 2019			23,468,750								23,468,750
Changes in Stockholders’ Equity
Other comprehensive income, net of tax							5,752				$ 5,752
Stock-based compensation						1,457					1,457
Issuance of common stock in stock offering, net of offering cost		$ 1		$ 35,464	$ 90,082				$ 35,464	$ 90,083
Issuance of common stock in stock offering, net of offering costs (in shares)	750,000	1,150,000
Issuance of common stock via employee stock purchase plan						741					$ 741
Issuance of common stock via employee stock purchase plan (in shares)			28,367								28,367
Issuance of common stock via equity incentive plan						1,740					$ 1,740
Issuance of common stock via equity incentive plan (in shares)			121,840
Net income (loss)								8,102			8,102
Ending balance at Sep. 30, 2020			$ 3			$ 309,496	$ 10,438	$ 41,958			$ 361,895
Ending balance (in shares) at Sep. 30, 2020			25,518,957								25,518,957

Reserve for Losses and Loss Adjustment Expenses - Roll Forward (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Reserve for Losses and Loss Adjustment Expenses
Reserve for losses and loss adjustment expenses net of reinsurance recoverables at beginning of period	$ 7,087	$ 1,428	$ 3,869	$ 4,165
Add: Incurred losses and loss adjustment expenses, net of reinsurance, related to:
Current year	40,803	2,647	46,867	3,660
Prior years	257	(208)	34	(262)
Total incurred	41,060	2,439	46,901	3,398
Deduct: Loss and loss adjustment expense payments, net of reinsurance, related to:
Current year	8,232	641	9,754	1,044
Prior years	375	312	1,476	3,605
Total payments	8,607	953	11,230	4,649
Reserve for losses and loss adjustment expense net of reinsurance recoverables at end of period	$ 39,540	$ 2,914	$ 39,540	$ 2,914

Investments - Security Holdings in an Unrealized Loss Position - General Information (Details) $ in Thousands	Sep. 30, 2020 USD ($) security	Dec. 31, 2019 USD ($) security
Number of positions:
Number of unrealized loss positions \| security	145	51
Fair Value
Fair Value	$ 96,288	$ 20,944
Unrealized Losses
Unrealized Losses	$ 1,604	$ 117

Reserve for Losses and Loss Adjustment Expenses - Adverse (Favorable) Development (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Adverse (Favorable) Development
Adverse (favorable) development	$ 257	$ (208)	$ 34	$ (262)

Cash Distribution (Details) $ in Millions	1 Months Ended
Cash Distribution (Details) $ in Millions	Mar. 31, 2019 USD ($)
Cash Distribution
One-time cash distribution	$ 5.1

Investments - Net Realized and Unrealized Investment Gains and Losses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Net realized and unrealized investment gains and losses
Gains on sales of fixed maturity securities	$ 66	$ 38	$ 256	$ 135
Gains on sales of equity securities	59		57	64
Total realized gains	125	38	313	199
Losses on sales of fixed maturity securities		(1)	(44)	(70)
Losses on sales of equity securities		(21)		(174)
Total realized losses		(22)	(44)	(244)
Net realized investment gains (losses)	125	16	269	(45)
Net unrealized gains (losses) on equity securities	(101)	345	974	3,310
Net realized and unrealized gains on investments	24	361	1,243	3,265
Proceeds from sales of fixed maturity securities
Proceeds from the sale of fixed maturity securities	$ 16,300	$ 28,800	$ 29,200	$ 88,100

Capital Stock - Reserved for Future Issuance (Details) - shares	Sep. 30, 2020	Dec. 31, 2019	Apr. 16, 2019
Common stock reserved for future issuance
Stock options outstanding	996,870	1,046,373
Total	3,433,855
2019 Equity Incentive Plan
Common stock reserved for future issuance
Shares authorized for future issuance	1,970,618		2,400,000
Restricted Stock Units
Common stock reserved for future issuance
Restricted stock units outstanding	14,734
Employee Stock
Common stock reserved for future issuance
Shares authorized for future issuance	451,633		240,000

Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Changes in accumulated other comprehensive income
Beginning balance	$ 218,556	$ 96,292
Ending balance	361,895	208,462
Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income
Beginning balance	4,686	(563)
Other comprehensive income (loss) before reclassification	7,494	8,090
Federal income tax expense	(1,573)	(1,666)
Other comprehensive income before reclassification, net of tax	5,921	6,424
Amounts reclassified from AOCI	(214)	44
Federal income tax expense	45	(9)
Amounts reclassified from AOCI, net of tax	(169)	35
Other comprehensive income	5,752	6,459
Ending balance	$ 10,438	$ 5,896

Investments

9 Months Ended

Sep. 30, 2020

Investments

Investments

2. Investments

The Company’s available‑for‑sale investments are summarized as follows:


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
September 30, 2020	Cost or Cost		Gains		Losses		Value
	(in thousands)
Fixed maturities:
U.S. Governments	$	15,809	$	844	$	(1)	$	16,652
States, territories, and possessions		4,338		352		(18)		4,672
Political subdivisions		2,286		88		—		2,374
Special revenue excluding mortgage/asset-backed securities		36,075		1,099		(81)		37,093
Industrial and miscellaneous		239,007		9,575		(1,150)		247,432
Mortgage/asset-backed securities		80,143		2,799		(354)		82,588
Total available-for-sale investments	$	377,658	$	14,757	$	(1,604)	$	390,811


			Gross		Gross
	Amortized		Unrealized		Unrealized		Fair
December 31, 2019	Cost or Cost		Gains		Losses		Value
	(in thousands)
Fixed maturities:
U.S. Governments	$	13,371	$	321	$	(13)	$	13,679
States, territories, and possessions		2,298		147		—		2,445
Political subdivisions		1,913		29		—		1,942
Special revenue excluding mortgage/asset-backed securities		18,139		343		(46)		18,436
Industrial and miscellaneous		124,726		4,326		(39)		129,013
Mortgage/asset-backed securities		50,831		824		(19)		51,636
Total available-for-sale investments	$	211,278	$	5,990	$	(117)	$	217,151

Security holdings in an unrealized loss position

As of September 30, 2020, the Company held 145 fixed maturity securities in an unrealized loss position with a total estimated fair value of $96.3 million and total gross unrealized losses of $1.6 million. As of December 31, 2019, the Company held 51 fixed maturity securities in an unrealized loss position with a total estimated fair value of $20.9 million and total gross unrealized losses of $0.1 million.

The aggregate fair value and gross unrealized losses of the Company’s investments aggregated by investment category and the length of time these individual securities have been in a continuous unrealized loss position as of September 30, 2020 and December 31, 2019, are as follows:


	Less Than 12 Months				More Than 12 Months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
September 30, 2020	Value		Losses		Value		Losses		Value		Losses
	(in thousands)
Fixed maturity securities:
U.S. Governments	$	500	$	(1)	$	—	$	—	$	500	$	(1)
States, territories, and possessions		1,490		(18)		—		—		1,490		(18)
Political subdivisions		—		—		—		—		—		—
Special revenue excluding mortgage/asset-backed securities		7,893		(81)		—		—		7,893		(81)
Industrial and miscellaneous		64,592		(1,150)		—		—		64,592		(1,150)
Mortgage/asset-backed securities		21,812		(354)		1		—		21,813		(354)
Total	$	96,287	$	(1,604)	$	1	$	—	$	96,288	$	(1,604)


	Less Than 12 Months				More Than 12 Months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
December 31, 2019	Value		Losses		Value		Losses		Value		Losses
	(in thousands)
Fixed maturity securities:
U.S. Governments	$	1,235	$	(11)	$	1,827	$	(2)	$	3,062	$	(13)
States, territories, and possessions		—		—		—		—		—		—
Political subdivisions		—		—		—		—		—		—
Special revenue excluding mortgage/asset-backed securities		3,548		(46)		—		—		3,548		(46)
Industrial and miscellaneous		6,929		(38)		188		(1)		7,117		(39)
Mortgage/asset-backed securities		7,035		(19)		182		—		7,217		(19)
Total	$	18,747	$	(114)	$	2,197	$	(3)	$	20,944	$	(117)

The Company considers the following factors in determining whether declines in the fair value of investments are other‑than‑temporary:

The significance of the decline in fair value compared to the cost basis,

The time period during which there has been a significant decline in fair value,

Whether the unrealized loss is credit‑driven or a result of changes in market interest rates,

A fundamental analysis of the business prospects and financial condition of the issuer,

The Company’s intent to sell the securities as of each reporting date, and

If the Company does not expect to recover the entire amortized cost basis or cost of the investment.

Based on the Company’s reviews as of September 30, 2020 and December 31, 2019, the Company determined that the fixed maturity securities’ unrealized losses were primarily the result of the interest rate environment and not the credit quality of the issuers. None of the fixed maturity securities were determined to be other‑than‑temporarily impaired. The Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before the recovery of their amortized cost basis. Therefore, none of the fixed maturity securities were written down during the respective periods.

Contractual maturities of available‑for‑sale fixed maturity securities

The amortized cost and fair value of fixed maturity securities at September 30, 2020, by contractual maturity, are shown below.


	Amortized		Fair
	Cost		Value
	(in thousands)
Due within one year	$	11,521	$	11,650
Due after one year through five years		144,424		148,032
Due after five years through ten years		104,751		110,836
Due after ten years		36,819		37,705
Mortgage and asset-backed securities		80,143		82,588
	$	377,658	$	390,811

Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations.

Net investment income summary

Net investment income is summarized as follows:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
	(in thousands)				(in thousands)
Interest income	$	2,149	$	1,678	$	6,242	$	4,140
Dividend income		109		132		354		299
Investment expense		(120)		(81)		(309)		(267)
Net investment income	$	2,138	$	1,729	$	6,287	$	4,172

Net realized and unrealized investment gains and losses

The following table presents net realized and unrealized investment gains and losses:


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2020		2019		2020		2019
		(in thousands)				(in thousands)
Realized gains:
Gains on sales of fixed maturity securities	$	66	$	38	$	256	$	135
Gains on sales of equity securities		59		—		57		64
Total realized gains		125		38		313		199
Realized losses:
Losses on sales of fixed maturity securities		—		(1)		(44)		(70)
Losses on sales of equity securities		—		(21)		—		(174)
Total realized losses		—		(22)		(44)		(244)
Net realized investment gains (losses)		125		16		269		(45)
Net unrealized gains (losses) on equity securities		(101)		345		974		3,310
Net realized and unrealized gains on investments	$	24	$	361	$	1,243	$	3,265

Realized gains and losses on disposition of investments are based on specific identification of the investments sold on the settlement date.

Proceeds from the sale of fixed maturity securities were $16.3 million and $28.8 million for the three months ended September 30, 2020 and 2019, respectively and $29.2 million and $88.1 million for the nine months ended September 30, 2020 and 2019, respectively.

The Company places securities on statutory deposit with certain state agencies to retain the right to do business in those states. These securities are included in available‑for‑sale investments on the balance sheet. At September 30, 2020 and December 31, 2019, the carrying value of securities on deposit with state regulatory authorities was $6.5 million and $5.1 million, respectively.

Investments - Securities on Deposit (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Investments
Fair Value	$ 390,811	$ 217,151
Securities on deposit with state regulatory authorities
Investments
Fair Value	$ 6,500	$ 5,100

Subsequent Events (Details) - Subsequent Event $ in Millions	Nov. 09, 2020 USD ($)
Subsequent Events
Renewal Rights Agreement, Ability to Gain Written Premiums, Amount	$ 17
Renewal Rights Agreement, Ability to Gain Written Premiums, Period	12 months

Earnings Per Share - Anti-dilutive Securities (Details) - shares	3 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Earnings Per Share
Common share equivalents excluded from calculation of diluted earnings per share as effect was anti-dilutive	761,337	196,741

Underwriting Information (Tables)

9 Months Ended

Sep. 30, 2020

Underwriting Information

Schedule of gross written premiums

Gross written premiums (“GWP”) by product are presented below:


	Three Months Ended September 30,								Nine Months Ended September 30,
	2020				2019				2020				2019
	($ in thousands)								($ in thousands)
			% of				% of				% of				% of
	Amount		GWP		Amount		GWP		Amount		GWP		Amount		GWP
Product
Residential Earthquake	$	40,507	39.3	%	$	35,711	53.9	%	$	103,503	40.1	%	$	95,005	53.2	%
Commercial Earthquake		18,061	17.5	%		8,402	12.7	%		40,727	15.8	%		23,020	12.9	%
Specialty Homeowners		17,048	16.6	%		8,572	12.9	%		38,461	14.9	%		24,994	14.0	%
Commercial All Risk		12,467	12.1	%		7,077	10.7	%		39,765	15.4	%		21,929	12.3	%
Inland Marine		4,406	4.3	%		1,060	1.6	%		9,747	3.8	%		1,294	0.7	%
Hawaii Hurricane		4,360	4.2	%		3,299	5.0	%		10,296	4.0	%		8,048	4.5	%
Residential Flood		2,170	2.1	%		1,450	2.2	%		5,728	2.2	%		3,494	2.0	%
Other		3,948	3.9	%		671	1.0	%		10,041	3.8	%		835	0.4	%
Total Gross Written Premiums	$	102,967	100.0	%	$	66,242	100.0	%	$	258,268	100.0	%	$	178,619	100.0	%

Gross written premiums by state are as follows:


	Three Months Ended September 30,								Nine Months Ended September 30,
	2020				2019				2020				2019
	($ in thousands)								($ in thousands)
			% of				% of				% of				% of
	Amount		GWP		Amount		GWP		Amount		GWP		Amount		GWP
State
California	$	52,960	51.4	%	$	36,789	55.5	%	$	124,131	48.1	%	$	99,543	55.7	%
Texas		20,460	19.9	%		11,239	17.0	%		55,047	21.3	%		32,678	18.3	%
Hawaii		5,097	5.0	%		3,675	5.5	%		11,990	4.6	%		8,688	4.9	%
Washington		4,340	4.2	%		2,910	4.4	%		10,002	3.9	%		6,430	3.6	%
South Carolina		2,089	2.0	%		1,258	1.9	%		7,203	2.8	%		4,614	2.5	%
North Carolina		2,839	2.8	%		967	1.5	%		7,131	2.8	%		2,654	1.5	%
Oregon		2,912	2.8	%		2,153	3.3	%		7,298	2.8	%		5,279	3.0	%
Mississippi		2,173	2.1	%		1,315	2.0	%		5,628	2.2	%		3,383	1.9	%
Other		10,097	9.8	%		5,936	8.9	%		29,838	11.5	%		15,350	8.6	%
Total Gross Written Premiums	$	102,967	100.0	%	$	66,242	100.0	%	$	258,268	100.0	%	$	178,619	100.0	%

Reserve for Losses and Loss Adjustment Expenses

9 Months Ended

Sep. 30, 2020

Reserve for Losses and Loss Adjustment Expenses

Reserve for Losses and Loss Adjustment Expenses

4. Reserve for Losses and Loss Adjustment Expenses

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


	Three months ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
		(in thousands)				(in thousands)
Reserve for losses and loss adjustment expenses net of reinsurance recoverables at beginning of period	$	7,087	$	1,428	$	3,869	$	4,165
Add: Incurred losses and loss adjustment expenses, net of reinsurance, related to:
Current year		40,803		2,647		46,867		3,660
Prior years		257		(208)		34		(262)
Total incurred		41,060		2,439		46,901		3,398
Deduct: Loss and loss adjustment expense payments, net of reinsurance, related to:
Current year		8,232		641		9,754		1,044
Prior years		375		312		1,476		3,605
Total payments		8,607		953		11,230		4,649
Reserve for losses and loss adjustment expense net of reinsurance recoverables at end of period		39,540		2,914		39,540		2,914
Add: Reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period		92,537		14,052		92,537		14,052
Reserve for losses and loss adjustment expenses gross of reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period	$	132,077	$	16,966	$	132,077	$	16,966

Considerable variability is inherent in the estimate of the reserve for losses and LAE. Although management believes the liability recorded for losses and LAE is adequate, the variability inherent in this estimate could result in changes to the ultimate liability, which may be material to stockholders’ equity.

The Company experienced adverse development of $0.3 million and $0.03 million in the three and nine months ended September 30, 2020 and favorable development of $0.2 million and $0.3 million in the three and nine months ended September 30, 2019.

Adverse development in the three and nine months ended September 30, 2020 was primarily due to reported activity in the assumed reinsurance line of business, partially offset by favorable development in the specialty homeowners line of business.

Favorable development during for the three and nine months ended September 30, 2019 was primarily due to lower than originally anticipated frequency and severity of claims in the specialty homeowners line of business.

Long-term Debt - Surplus Notes (Details) - USD ($) $ in Millions	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2018
Long-term debt
Debt instrument, face amount	$ 1.3
Unamortized redemption premium	0.4
Unamortized debt issuance costs	0.9
Interest Expense.
Long-term debt
Redemption of debt premium	0.4
Other Underwriting Expense
Long-term debt
Write-off of unamortized debt issuance costs	$ 0.9
Senior Notes \| 2018 Floating Rate Notes
Long-term debt
Debt instrument, face amount		$ 20.0