0001558370-23-008567 | 10-Q | XBRL Viewer

Three months ended March 31,

(in thousands)

Stock-Based Compensation

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Investments:
Fixed maturity securities available for sale, at fair value (amortized cost: $594,736 in 2023; $561,580 in 2022)	$ 554,489	$ 515,064
Equity securities, at fair value (cost: $42,352 in 2023; $42,352 in 2022)	39,356	38,576
Total investments	593,845	553,640
Cash and cash equivalents	80,295	68,108
Restricted cash	65	56
Accrued investment income	4,077	3,777
Premiums receivable	187,910	162,858
Deferred policy acquisition costs, net of ceding commissions and fronting fees	54,187	56,740
Reinsurance recoverable on paid losses and loss adjustment expenses	45,801	39,718
Reinsurance recoverable on unpaid losses and loss adjustment expenses	183,601	153,895
Ceded unearned premiums	232,425	204,084
Prepaid expenses and other assets	41,291	44,088
Deferred tax assets, net	9,005	10,622
Property and equipment, net	540	603
Intangible assets, net	7,948	8,261
Total assets	1,440,990	1,306,450
Liabilities:
Accounts payable and other accrued liabilities	19,401	25,760
Reserve for losses and loss adjustment expenses	264,967	231,415
Unearned premiums	496,182	471,314
Ceded premium payable	173,035	146,127
Funds held under reinsurance treaty	11,356	10,680
Borrowings from credit agreements	71,400	36,400
Total liabilities	1,036,341	921,696
Stockholders' equity:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding as of March 31, 2023 and December 31, 2022
Common stock, $0.0001 par value, 500,000,000 shares authorized, 24,942,196 and 25,027,467 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively	3	3
Additional paid-in capital	337,492	333,558
Accumulated other comprehensive loss	(31,041)	(36,515)
Retained earnings	98,195	87,708
Total stockholders' equity	404,649	384,754
Total liabilities and stockholders' equity	$ 1,440,990	$ 1,306,450

Investments - Security Holdings in an Unrealized Loss Position - General Information (Details) $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($) security	Dec. 31, 2022 USD ($) security
Number of positions:
Number of unrealized loss positions \| security	538	543
Fair Value
Fair Value \| $	$ 497,928	$ 484,679
Unrealized Losses
Unrealized Losses \| $	$ 40,415	$ 46,923
Number of securities for which allowance for credit losses has been recorded \| security	2

Reserve for Losses and Loss Adjustment Expenses - Roll Forward (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022	Dec. 31, 2022
Reserve for Losses and Loss Adjustment Expenses
Reserve for losses and LAE net of reinsurance recoverables at beginning of period	$ 77,520	$ 45,419
Add: Incurred losses and LAE, net of reinsurance, related to:
Current year	17,300	13,449
Prior years	3,352	1,505
Total incurred	20,652	14,954
Deduct: Loss and LAE payments, net of reinsurance, related to:
Current year	1,393	1,490
Prior years	15,413	7,497
Total payments	16,806	8,987
Reserve for losses and LAE net of reinsurance recoverables at end of period	81,366	51,386
Add: Reinsurance recoverables on unpaid losses and LAE at end of period	183,601	113,726	$ 153,895
Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at end of period	$ 264,967	$ 165,112	$ 231,415

Stockholders' Equity - Unrecognized Compensation Expense (Details) $ in Millions		3 Months Ended
	Jul. 15, 2021	Mar. 31, 2023 USD ($) D item shares
Unrecognized stock-based compensation expense
Total unrecognized stock-based compensation expense, options		$ 2.9
Stock Options
Unrecognized stock-based compensation expense
Total unrecognized stock-based compensation expense, options		$ 2.9
Weighted-average period over which unrecognized stock-based compensation expense is expected to be recognized		1 year 5 months 19 days
Restricted Stock Units
Unrecognized stock-based compensation expense
Total unrecognized stock-based compensation expense, restricted stock units and performance stock units		$ 19.7
Granted (in shares) \| shares		123,396
Weighted-average period over which unrecognized stock-based compensation expense is expected to be recognized		2 years 9 months 18 days
Performance Stock Units
Unrecognized stock-based compensation expense
Total unrecognized stock-based compensation expense, restricted stock units and performance stock units		$ 12.5
Granted (in shares) \| shares		44,354
Weighted-average period over which unrecognized stock-based compensation expense is expected to be recognized		3 years 2 months 23 days
Stock price milestones \| item		0
Percentage of predetermined performance achievement	100.00%
Performance Stock Units \| Share-based Payment Arrangement, Tranche One
Unrecognized stock-based compensation expense
Number of days, achievement of milestone stock price \| D		30
Award service period		5 years
Performance Stock Units \| Share-based Payment Arrangement, Tranche Two
Unrecognized stock-based compensation expense
Award service period		3 years

Stockholders' Equity - Stock Options - Activity (Details) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2023 USD ($) $ / shares shares
Number of shares
Outstanding at beginning of period (in shares) \| shares	882,892
Exercised (in shares) \| shares	(5,957)
Canceled (in shares) \| shares	(3,589)
Outstanding at end of period (in shares) \| shares	873,346
Weighted-average exercise price
Outstanding at beginning of period (in dollars per share) \| $ / shares	$ 33.85
Exercised (in dollars per share) \| $ / shares	15.24
Canceled (in dollars per share) \| $ / shares	64.91
Outstanding at end of period (in dollars per share) \| $ / shares	$ 33.85
Additional disclosures
Weighted average remaining contractual term	6 years 7 months 17 days
Aggregate intrinsic value \| $	$ 23,374
Vested and Exercisable
Vested and exercisable, number (in shares) \| shares	724,939
Vested and exercisable, weighted average exercise price (in dollars per share) \| $ / shares	$ 28.15
Vested and exercisable, weighted average remaining contractual term	6 years 3 months 29 days
Vested and exercisable, aggregate intrinsic value \| $	$ 22,598

Document and Entity Information - $ / shares	3 Months Ended
Document and Entity Information - $ / shares	Mar. 31, 2023	May 05, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2023
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
Trading Symbol	PLMR
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		24,857,872
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q1
Entity Central Index Key	0001761312
Amendment Flag	false
Entity Listing, Par Value Per Share	$ 0.0001

Condensed Consolidated Statements of Income and Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Revenues:
Gross written premiums	$ 250,112	$ 170,934
Ceded written premiums	(170,344)	(89,552)
Net written premiums	79,768	81,382
Change in unearned premiums	3,473	(5,350)
Net earned premiums	83,241	76,032
Net investment income	5,120	2,579
Net realized and unrealized gains (losses) on investments	146	(1,278)
Commission and other income	695	777
Total revenues	89,202	78,110
Expenses:
Losses and loss adjustment expenses	20,652	14,954
Acquisition expenses, net of ceding commissions and fronting fees	25,679	28,054
Other underwriting expenses	19,222	15,925
Interest expense	1,020	93
Total expenses	66,573	59,026
Income before income taxes	22,629	19,084
Income tax expense	5,316	4,547
Net income	17,313	14,537
Other comprehensive income (loss), net:
Net unrealized gains (losses) on securities available for sale	5,474	(18,463)
Net comprehensive income (loss)	$ 22,787	$ (3,926)
Per Share Data:
Basic earnings per share	$ 0.69	$ 0.57
Diluted earnings per share	$ 0.68	$ 0.56
Weighted-average common shares outstanding:
Basic (in shares)	24,969,703	25,362,179
Diluted (in shares)	25,442,902	25,899,290

Income Taxes (Details)	3 Months Ended
Income Taxes (Details)	Mar. 31, 2023	Mar. 31, 2022
Effective Income Tax Rate Reconciliation, Percent
Company's tax rate (as percent)	23.50%	23.80%
Statutory tax rate (as a percent)	21.00%	21.00%

Investments - Security Holdings in an Unrealized Loss Position - Tabular Disclosure (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Fair Value
Fair Value - Less Than 12 Months	$ 251,239	$ 384,693
Fair Value - More Than 12 Months	246,689	99,986
Fair Value - Total	497,928	484,679
Unrealized Losses
Unrealized Losses - Less Than 12 Months	(11,517)	(31,558)
Unrealized Losses - More Than 12 Months	(28,898)	(15,365)
Unrealized Losses - Total	(40,415)	(46,923)
U.S. Governments
Fair Value
Fair Value - Less Than 12 Months	25,586	41,077
Fair Value - More Than 12 Months	23,438	6,853
Fair Value - Total	49,024	47,930
Unrealized Losses
Unrealized Losses - Less Than 12 Months	(391)	(1,523)
Unrealized Losses - More Than 12 Months	(1,372)	(730)
Unrealized Losses - Total	(1,763)	(2,253)
States, territories, and possessions
Fair Value
Fair Value - Less Than 12 Months	3,310	3,227
Fair Value - Total	3,310	3,227
Unrealized Losses
Unrealized Losses - Less Than 12 Months	(466)	(552)
Unrealized Losses - Total	(466)	(552)
Political subdivisions
Fair Value
Fair Value - Less Than 12 Months	454	4,298
Fair Value - More Than 12 Months	3,980
Fair Value - Total	4,434	4,298
Unrealized Losses
Unrealized Losses - Less Than 12 Months	(21)	(621)
Unrealized Losses - More Than 12 Months	(460)
Unrealized Losses - Total	(481)	(621)
Special revenue excluding mortgage/asset-backed securities
Fair Value
Fair Value - Less Than 12 Months	8,050	25,091
Fair Value - More Than 12 Months	22,928	5,080
Fair Value - Total	30,978	30,171
Unrealized Losses
Unrealized Losses - Less Than 12 Months	(595)	(3,287)
Unrealized Losses - More Than 12 Months	(2,974)	(1,200)
Unrealized Losses - Total	(3,569)	(4,487)
Corporate and other
Fair Value
Fair Value - Less Than 12 Months	136,179	192,185
Fair Value - More Than 12 Months	120,285	55,605
Fair Value - Total	256,464	247,790
Unrealized Losses
Unrealized Losses - Less Than 12 Months	(6,630)	(15,667)
Unrealized Losses - More Than 12 Months	(14,603)	(8,481)
Unrealized Losses - Total	(21,233)	(24,148)
Mortgage/asset-backed securities
Fair Value
Fair Value - Less Than 12 Months	77,660	118,815
Fair Value - More Than 12 Months	76,058	32,448
Fair Value - Total	153,718	151,263
Unrealized Losses
Unrealized Losses - Less Than 12 Months	(3,414)	(9,908)
Unrealized Losses - More Than 12 Months	(9,489)	(4,954)
Unrealized Losses - Total	$ (12,903)	$ (14,862)

Underwriting Information - Gross Written Premiums by State (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Gross written premiums
Amount	$ 250,112	$ 170,934
% of GWP	100.00%	100.00%
California
Gross written premiums
Amount	$ 131,889	$ 68,718
% of GWP	52.70%	40.20%
Texas
Gross written premiums
Amount	$ 23,210	$ 18,979
% of GWP	9.30%	11.10%
Florida
Gross written premiums
Amount	$ 12,096	$ 4,962
% of GWP	4.80%	2.90%
Washington
Gross written premiums
Amount	$ 11,972	$ 6,881
% of GWP	4.80%	4.00%
Hawaii
Gross written premiums
Amount	$ 10,105	$ 8,540
% of GWP	4.00%	5.00%
Oregon
Gross written premiums
Amount	$ 6,780	$ 4,373
% of GWP	2.70%	2.60%
Illinois
Gross written premiums
Amount	$ 4,702	$ 4,273
% of GWP	1.90%	2.50%
New York
Gross written premiums
Amount	$ 3,871	$ 2,380
% of GWP	1.50%	1.40%
Other
Gross written premiums
Amount	$ 45,487	$ 51,828
% of GWP	18.30%	30.30%

Stockholders' Equity - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Stockholders' Equity
Stock-based compensation expense	$ 3,450	$ 2,760

Income Taxes

3 Months Ended

Mar. 31, 2023

Income Taxes

Income Taxes

8. Income Taxes

The Company calculates its tax provision in interim periods using its best estimate of the effective tax rate expected for the full year. During the three months ended March 31, 2023, the Company’s income tax rate of 23.5% was higher than the statutory rate of 21% due primarily to non-deductible executive compensation expense. During the three months ended March 31, 2022, the Company’s income tax rate of 23.8% was higher than the statutory rate of 21% also due primarily to non-deductible executive compensation expense.

- 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

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Paragraph 21
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Topic 740
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-Section S99
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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-Paragraph 17
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
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-Section 50
-Paragraph 14
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI https://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-Section 50
-Paragraph 2
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
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-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Accumulated Other Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2023

Accumulated Other Comprehensive Income

Schedule of changes in accumulated other comprehensive income (AOCI)


	Three Months Ended March 31,
	2023		2022

		(in thousands)
Beginning Balance	$	(36,515)	$	5,312

Other comprehensive income (loss) before reclassification		6,956		(23,368)
Federal income tax expense		(1,460)		4,907
Other comprehensive income (loss) before reclassification, net of tax		5,496		(18,461)

Amounts reclassified from AOCI		(28)		(2)
Federal income tax expense		6		—
Amounts reclassified from AOCI, net of tax		(22)		(2)

Other comprehensive income (loss)		5,474		(18,463)
Balance at end of period	$	(31,041)	$	(13,151)

Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2023

Stockholders' Equity

Schedule of common stock reserved for future issuance


Stock options outstanding under 2019 Equity Incentive Plan	873,346
Restricted stock units outstanding under 2019 Equity Incentive Plan	355,234
Performance stock units outstanding under 2019 Equity Incentive Plan, at target	426,359
Shares authorized for future issuance under 2019 Equity Incentive Plan	3,143,477
Shares authorized for future issuance under 2019 Employee Stock Purchase Plan	1,140,126
Total	5,938,542

Schedule of stock-based compensation expense

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 January 1, 2023	882,892	$	33.85	-	$	-
Options granted	-		-
Options exercised	(5,957)		15.24
Options canceled	(3,589)		64.91
Outstanding at March 31, 2023	873,346	$	33.85	6.63	$	23,374
Vested and Exercisable at March 31, 2023	724,939	$	28.15	6.33	$	22,598

Schedule of RSU transactions


	Number of shares		Weighted-average grant date fair value
Outstanding at January 1, 2023	271,951	$	68.90
Granted	123,396		51.32
Released	(35,728)		59.92
Forfeited	(4,385)		52.83
Non-vested outstanding at March 31, 2023	355,234	$	63.89

Schedule of Performance stock unit transactions


	Number of shares		Weighted-average grant date fair value
Outstanding at January 1, 2023	383,103	$	37.62
Granted	44,354		51.25
Vested	—		—
Forfeited	(1,098)		55.36
Non-vested outstanding at March 31, 2023	426,359	$	38.99

Stockholders' Equity - Stock Options - Vesting (Details)	3 Months Ended
	Mar. 31, 2023
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 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
Restricted Stock Units \| Minimum
Stock-Based Compensation
Vesting period	1 year
Restricted Stock Units \| Maximum
Stock-Based Compensation
Vesting period	5 years

Reinsurance (Details) - USD ($) $ in Millions	3 Months Ended
Reinsurance (Details) - USD ($) $ in Millions	Mar. 31, 2023	Jun. 30, 2022	Mar. 31, 2021
Reinsurance Retention Policy
Catastrophe bond, face value		$ 275.0	$ 400.0
Catastrophe
Reinsurance Retention Policy
Retention amount	$ 12.5
Earthquake
Reinsurance Retention Policy
XOL reinsurance, protection	2,150.0
Hawaii Hurricane
Reinsurance Retention Policy
XOL reinsurance, protection	1,010.0
U.S. Hurricane
Reinsurance Retention Policy
XOL reinsurance, protection	$ 250.0

Reinsurance

3 Months Ended

Mar. 31, 2023

Reinsurance

Reinsurance

10. Reinsurance

The Company utilizes reinsurance in order to limit its exposure to losses and enable it to underwrite policies with sufficient limits to meet policyholder needs. The Company utilizes both excess of loss (XOL) and quota share reinsurance.

As of March 31, 2023, the Company’s catastrophe event retention is $12.5 million for all perils. As of March 31, 2023, the Company’s XOL reinsurance structure provides protection up to $2.15 billion for earthquake events, $1.01 billion for Hawaii hurricane events, and $250 million for continental U.S. hurricane events.

In addition to reinsurance purchased from traditional reinsurers, the Company has historically incorporated collateralized protection from the insurance linked securities market via catastrophe bonds. During the first quarter of 2021, the Company closed a $400 million 144A catastrophe bond which became effective June 1, 2021. The catastrophe bond was completed through Torrey Pines Re Pte. Ltd. (“Torrey Pines Re Pte.”). Torrey Pines Re Pte. is a special purpose reinsurance vehicle incorporated in Singapore that provides Palomar with indemnity-based reinsurance covering earthquake events through June 1, 2024. During the second quarter of 2022, the Company also closed a $275 million 144A catastrophe bond which became effective June 1, 2022. This catastrophe bond was completed through Torrey Pines Re Ltd., a Bermuda-domiciled special purpose insurer that provides indemnity-based reinsurance covering earthquake events through June 1, 2025.

Earnings Per Share

3 Months Ended

Mar. 31, 2023

Earnings Per Share

Earnings Per Share

9. Earnings Per Share

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


	Three months ended March 31,
	2023		2022

	(in thousands, except shares and per share data)
Net income	$	17,313	$	14,537
Weighted average common shares outstanding:
Basic		24,969,703		25,362,179
Common Share equivalents		473,198		537,111
Diluted		25,442,902		25,899,290

Earnings per share:
Basic	$	0.69	$	0.57
Diluted	$	0.68	$	0.56

Common share equivalents relate primarily to outstanding stock options, RSUs and PSUs under the 2019 Plan and unpurchased shares under the 2019 ESPP and are calculated using the treasury stock method.

Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022	Mar. 31, 2022	Dec. 31, 2021
Cash and cash equivalents and restricted cash and cash equivalents
Cash and cash equivalents	$ 80,295	$ 68,108
Restricted cash	65	56
Cash and cash equivalents and restricted cash	$ 80,360	$ 68,164	$ 46,939	$ 50,371

Investments - Contractual Maturities of Available for Sale Fixed Maturity Securities (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Amortized Cost
Due within one year	$ 47,423
Due after one year through five years	184,515
Due after five years through ten years	139,084
Due after ten years	31,658
Mortgage and asset-backed securities	192,056
Amortized Cost or Cost	594,736	$ 561,580
Fair Value
Due within one year	45,867
Due after one year through five years	173,737
Due after five years through ten years	127,547
Due after ten years	27,731
Mortgage and asset-backed securities	179,607
Fair Value	$ 554,489	$ 515,064

Investments - Securities on Deposit (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Investments
Fair Value	$ 554,489	$ 515,064
Securities on deposit with state regulatory authorities
Investments
Fair Value	$ 9,600	$ 8,500

Fair Value Measurements - Assets Measured on Recurring Basis, Unobservable Input Reconciliation (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Fair Value Measurements
Fixed income securities classified as Level 3	$ 0	$ 0

Fair Value Measurements

3 Months Ended

Mar. 31, 2023

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 hierarchy for financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2023 and December 31, 2022.


March 31, 2023	Level 1		Level 2		Level 3		Total

	(in thousands)
Assets:
Fixed maturity securities
U.S. Governments	$	—	$	49,649	$	—	$	49,649
States, territories, and possessions		—		5,514		—		5,514
Political subdivisions		—		4,434		—		4,434
Special revenue excluding mortgage/asset-backed securities		—		34,241		—		34,241
Corporate and other		—		281,044		—		281,044
Mortgage/asset-backed securities		—		179,607		—		179,607
Equity securities		39,356		—		—		39,356
Cash, cash equivalents, and restricted cash		80,360		—		—		80,360
Total assets	$	119,716	$	554,489	$	—	$	674,205


December 31, 2022	Level 1		Level 2		Level 3		Total

	(in thousands)
Assets:
Fixed maturity securities
U.S. Governments	$	—	$	48,551	$	—	$	48,551
States, territories, and possessions		—		5,354		—		5,354
Political subdivisions		—		4,298		—		4,298
Special revenue excluding mortgage/asset-backed securities		—		32,799		—		32,799
Corporate and other		—		254,095		—		254,095
Mortgage/asset-backed securities		—		169,967		—		169,967
Equity securities		38,576		—		—		38,576
Cash, cash equivalents, and restricted cash		68,164		—		—		68,164
Total assets	$	106,740	$	515,064	$	—	$	621,804

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. The carrying amount of the Company’s borrowings under the Federal Home Loan Bank (“FHLB”) line of credit and U.S. Bank credit agreement (the “Credit Agreement”) approximate fair value as the Company is currently borrowing at a variable rate which frequently reprices at market rates.

Transfers between Level 3 and Level 2 securities result from changes in the availability of observable market inputs and are recorded at the beginning of the reporting period. As of March 31, 2023 and December 31, 2022, the Company had no fixed income securities classified as Level 3.

- 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

Underwriting Information - Reportable Segments (Details) - segment	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Reportable segment
Number of reportable segments	1	1

Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Earnings Per Share
Net income	$ 17,313	$ 14,537
Weighted average common shares outstanding:
Basic (in shares)	24,969,703	25,362,179
Common Share equivalents (in shares)	473,198	537,111
Diluted (in shares)	25,442,902	25,899,290
Earnings per share:
Basic (in dollars per share)	$ 0.69	$ 0.57
Diluted (in dollars per share)	$ 0.68	$ 0.56

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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Reference 33: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 10
-Section S99
-Paragraph 1B
-Subparagraph (SX 210.13-02(a)(4)(iii)(A))
-URI https://asc.fasb.org/extlink&oid=126975872&loc=SL124442552-122756

Reference 34: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8906-108599

Reference 35: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8933-108599

+ Details

Stockholders' Equity - 2019 Employee Stock Purchase Plan (Details) - shares	3 Months Ended
	Mar. 31, 2023	Apr. 16, 2019
Stock-Based Compensation
Issuance of common stock via employee stock purchase plan (in shares)	7,724
Employee Stock
Stock-Based Compensation
Shares authorized (in shares)		240,000
Annual increase (in shares)	240,000

Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands	Common Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings	Total
Beginning balance at Dec. 31, 2021	$ 3	$ 318,902	$ 5,312	$ 69,952	$ 394,169
Beginning balance (in shares) at Dec. 31, 2021	25,428,929
Changes in Stockholders' Equity
Other comprehensive income (loss), net of tax			(18,463)		(18,463)
Stock-based compensation		2,760			2,760
Issuance of common stock via employee stock purchase plan		333			333
Issuance of common stock via employee stock purchase plan (in shares)	6,078
Issuance of common stock via equity incentive plan		53			53
Issuance of common stock via equity incentive plan (in shares)	15,625
Repurchases of common stock				(12,989)	(12,989)
Repurchases of common stock (in shares)	(219,061)
Net income				14,537	14,537
Balance at end of period at Mar. 31, 2022	$ 3	322,048	(13,151)	71,500	380,400
Ending balance (in shares) at Mar. 31, 2022	25,231,571
Beginning balance at Dec. 31, 2022	$ 3	333,558	(36,515)	87,708	$ 384,754
Beginning balance (in shares) at Dec. 31, 2022	25,027,467				25,027,467
Changes in Stockholders' Equity
Other comprehensive income (loss), net of tax			5,474		$ 5,474
Stock-based compensation		3,450			3,450
Issuance of common stock via employee stock purchase plan		394			$ 394
Issuance of common stock via employee stock purchase plan (in shares)	7,724				7,724
Issuance of common stock via equity incentive plan		90			$ 90
Issuance of common stock via equity incentive plan (in shares)	41,685
Repurchases of common stock				(6,826)	(6,826)
Repurchases of common stock (in shares)	(134,680)
Net income				17,313	17,313
Balance at end of period at Mar. 31, 2023	$ 3	$ 337,492	$ (31,041)	$ 98,195	$ 404,649
Ending balance (in shares) at Mar. 31, 2023	24,942,196				24,942,196

Fair Value Measurements (Tables)

3 Months Ended

Mar. 31, 2023

Fair Value Measurements

Schedule of hierarchy for financial assets and liabilities measured at fair value


March 31, 2023	Level 1		Level 2		Level 3		Total

	(in thousands)
Assets:
Fixed maturity securities
U.S. Governments	$	—	$	49,649	$	—	$	49,649
States, territories, and possessions		—		5,514		—		5,514
Political subdivisions		—		4,434		—		4,434
Special revenue excluding mortgage/asset-backed securities		—		34,241		—		34,241
Corporate and other		—		281,044		—		281,044
Mortgage/asset-backed securities		—		179,607		—		179,607
Equity securities		39,356		—		—		39,356
Cash, cash equivalents, and restricted cash		80,360		—		—		80,360
Total assets	$	119,716	$	554,489	$	—	$	674,205


December 31, 2022	Level 1		Level 2		Level 3		Total

	(in thousands)
Assets:
Fixed maturity securities
U.S. Governments	$	—	$	48,551	$	—	$	48,551
States, territories, and possessions		—		5,354		—		5,354
Political subdivisions		—		4,298		—		4,298
Special revenue excluding mortgage/asset-backed securities		—		32,799		—		32,799
Corporate and other		—		254,095		—		254,095
Mortgage/asset-backed securities		—		169,967		—		169,967
Equity securities		38,576		—		—		38,576
Cash, cash equivalents, and restricted cash		68,164		—		—		68,164
Total assets	$	106,740	$	515,064	$	—	$	621,804

Accumulated Other Comprehensive Income

3 Months Ended

Mar. 31, 2023

Accumulated Other Comprehensive Income

Accumulated Other Comprehensive Income

6. Accumulated Other Comprehensive Income

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


	Three Months Ended March 31,
	2023		2022

		(in thousands)
Beginning Balance	$	(36,515)	$	5,312

Other comprehensive income (loss) before reclassification		6,956		(23,368)
Federal income tax expense		(1,460)		4,907
Other comprehensive income (loss) before reclassification, net of tax		5,496		(18,461)

Amounts reclassified from AOCI		(28)		(2)
Federal income tax expense		6		—
Amounts reclassified from AOCI, net of tax		(22)		(2)

Other comprehensive income (loss)		5,474		(18,463)
Balance at end of period	$	(31,041)	$	(13,151)

Underwriting Information (Tables)

3 Months Ended

Mar. 31, 2023

Underwriting Information

Schedule of gross written premiums


	Three Months Ended March 31,
	2023				2022

	($ in thousands)
			% of				% of
	Amount		GWP		Amount		GWP
Product
Fronting Premiums	$	91,755	36.7	%	$	29,845	17.5	%
Residential Earthquake		55,725	22.3	%		46,336	27.1	%
Commercial Earthquake		37,770	15.1	%		25,144	14.7	%
Inland Marine		31,049	12.4	%		18,237	10.7	%
Casualty		11,733	4.7	%		5,007	2.9	%
Commercial All Risk		8,376	3.3	%		11,210	6.6	%
Hawaii Hurricane		8,073	3.2	%		6,914	4.0	%
Residential Flood		4,235	1.7	%		2,993	1.8	%
Specialty Homeowners		(59)	—	%		16,284	9.5	%
Other		1,455	0.6	%		8,964	5.2	%
Total Gross Written Premiums	$	250,112	100.0	%	$	170,934	100.0	%

Gross written premiums by state are as follows:


	Three Months Ended March 31,
	2023				2022

	($ in thousands)
			% of				% of
	Amount		GWP		Amount		GWP
State
California	$	131,889	52.7	%	$	68,718	40.2	%
Texas		23,210	9.3	%		18,979	11.1	%
Florida		12,096	4.8	%		4,962	2.9	%
Washington		11,972	4.8	%		6,881	4.0	%
Hawaii		10,105	4.0	%		8,540	5.0	%
Oregon		6,780	2.7	%		4,373	2.6	%
Illinois		4,702	1.9	%		4,273	2.5	%
New York		3,871	1.5	%		2,380	1.4	%
Other		45,487	18.3	%		51,828	30.3	%
Total Gross Written Premiums	$	250,112	100.0	%	$	170,934	100.0	%

Gross written premiums by insurance subsidiary are as follows:


	Three Months Ended March 31,
	2023				2022

	($ in thousands)
			% of				% of
	Amount		GWP		Amount		GWP
Subsidiary
PSIC	$	150,704	60.3	%	$	104,004	60.8	%
PESIC		99,408	39.7	%		66,930	39.2	%
Total Gross Written Premiums	$	250,112	100.0	%	$	170,934	100.0	%

Stockholders' Equity - Share Repurchases (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2023	Jan. 31, 2022
Stockholders' Equity
Amount of authorizes repurchase		$ 100.0
Amount of repurchase of shares	$ 6.8
Repurchase of shares (in shares)	134,680

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Operating activities
Net cash provided by operating activities	$ 17,437	$ 49,190
Investing activities
Purchases of property and equipment		(7)
Capitalized software costs	(1,658)	(1,389)
Purchases of fixed maturity securities	(54,871)	(73,921)
Purchases of equity securities		(10,002)
Sales and maturities of fixed maturity securities	21,679	38,159
Change in securities receivable or payable, net	950	(7,843)
Payment of additional costs associated with purchase of policy renewal rights		(15)
Net cash used in investing activities	(33,900)	(55,018)
Financing activities
Proceeds from line of credit	35,000	15,000
Proceeds from common stock issued via employee stock purchase plan	394	333
Proceeds from common stock issued via stock option exercises	91	53
Repurchases of common stock	(6,826)	(12,989)
Net cash provided by financing activities	28,659	2,397
Net increase (decrease) in cash, cash equivalents and restricted cash	12,196	(3,432)
Cash, cash equivalents and restricted cash at beginning of period	68,164	50,371
Cash, cash equivalents and restricted cash at end of period	80,360	$ 46,939
Supplementary cash flow information:
Cash paid for income taxes	1
Cash paid for interest	$ 1,017

Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Changes in accumulated other comprehensive income
Beginning balance	$ 384,754	$ 394,169
Other comprehensive income (loss)	5,474	(18,463)
Balance at end of period	404,649	380,400
Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income
Beginning balance	(36,515)	5,312
Other comprehensive income (loss) before reclassification	6,956	(23,368)
Federal income tax expense	(1,460)	4,907
Other comprehensive income (loss) before reclassification, net of tax	5,496	(18,461)
Amounts reclassified from AOCI	(28)	(2)
Federal income tax expense	6
Amounts reclassified from AOCI, net of tax	(22)	(2)
Other comprehensive income (loss)	5,474	(18,463)
Balance at end of period	$ (31,041)	$ (13,151)

Summary of Operations and Basis of Presentation

3 Months Ended

Mar. 31, 2023

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, 2022, filed with the SEC on March 1, 2023 (the “2022 Annual Report on Form 10-K”).

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

Recently adopted accounting pronouncements

The Company has not adopted any new accounting guidance during the three months ended March 31, 2023.

Recently issued accounting pronouncements not yet adopted

There are not currently any recent accounting pronouncements or pending accounting guidance that have significance, or potential significance, to the Company’s consolidated financial statements.

Underwriting Information

3 Months Ended

Mar. 31, 2023

Underwriting Information

Underwriting Information

7. Underwriting Information

The Company has a single reportable segment and offers primarily property and casualty insurance products. The Company also writes premiums under fronting agreements where it cedes the majority of the premium and risk in exchange for a fronting fee. Gross written premiums (“GWP”) by product are presented below:


	Three Months Ended March 31,
	2023				2022

	($ in thousands)
			% of				% of
	Amount		GWP		Amount		GWP
Product
Fronting Premiums	$	91,755	36.7	%	$	29,845	17.5	%
Residential Earthquake		55,725	22.3	%		46,336	27.1	%
Commercial Earthquake		37,770	15.1	%		25,144	14.7	%
Inland Marine		31,049	12.4	%		18,237	10.7	%
Casualty		11,733	4.7	%		5,007	2.9	%
Commercial All Risk		8,376	3.3	%		11,210	6.6	%
Hawaii Hurricane		8,073	3.2	%		6,914	4.0	%
Residential Flood		4,235	1.7	%		2,993	1.8	%
Specialty Homeowners		(59)	—	%		16,284	9.5	%
Other		1,455	0.6	%		8,964	5.2	%
Total Gross Written Premiums	$	250,112	100.0	%	$	170,934	100.0	%

Gross written premiums by state are as follows:


	Three Months Ended March 31,
	2023				2022

	($ in thousands)
			% of				% of
	Amount		GWP		Amount		GWP
State
California	$	131,889	52.7	%	$	68,718	40.2	%
Texas		23,210	9.3	%		18,979	11.1	%
Florida		12,096	4.8	%		4,962	2.9	%
Washington		11,972	4.8	%		6,881	4.0	%
Hawaii		10,105	4.0	%		8,540	5.0	%
Oregon		6,780	2.7	%		4,373	2.6	%
Illinois		4,702	1.9	%		4,273	2.5	%
New York		3,871	1.5	%		2,380	1.4	%
Other		45,487	18.3	%		51,828	30.3	%
Total Gross Written Premiums	$	250,112	100.0	%	$	170,934	100.0	%

Gross written premiums by insurance subsidiary are as follows:


	Three Months Ended March 31,
	2023				2022

	($ in thousands)
			% of				% of
	Amount		GWP		Amount		GWP
Subsidiary
PSIC	$	150,704	60.3	%	$	104,004	60.8	%
PESIC		99,408	39.7	%		66,930	39.2	%
Total Gross Written Premiums	$	250,112	100.0	%	$	170,934	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
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-URI https://asc.fasb.org/extlink&oid=126901519&loc=d3e8924-108599

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+ Details

Credit Agreements

3 Months Ended

Mar. 31, 2023

Credit Agreements

Credit Agreements

11. Credit Agreements

U.S. Bank Credit Agreement

In December 2021, the Company entered into a Credit Agreement with U.S. Bank National Association which provides a revolving credit facility of up to $100 million through December 8, 2026. Interest on the credit facility

accrues on each SOFR rate loan at the applicable SOFR (as defined in the Credit Agreement) plus 1.75% and on each base rate loan at the applicable Alternate Base Rate (as defined in the Credit Agreement) plus 0.75%. A loan may be either a SOFR rate loan or a base rate loan, at the Company’s discretion. Outstanding amounts under the Credit Agreement may be prepaid in full or in part at any time with no prepayment premium and may be reduced in full or in part at any time upon prior notice. In addition to interest on funds borrowed, the Company must pay an unused line fee of 0.25% on any amounts not borrowed.

The Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants, including, among other things, financial covenants, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness and dividends and other distributions. The financial covenants include requirements to maintain a permissible debt to capital ratio, a minimum consolidated net worth, a minimum risk based capital ratio and minimum A.M. Best financial strength rating. The Credit Agreement also contains customary events of default, such as non-compliance with financial covenants. If an event of default occurs, any debt may be declared immediately due and payable. As of March 31, 2023, the Company was in compliance with all debt covenants.

As of March 31, 2023, the Company had $35.0 million of borrowings outstanding on the Credit Agreement at a rate of 6.55%. Interest expense on the Credit Agreement was $0.6 million for the three months ended March 31, 2023.

FHLB Line of Credit

The Company’s PSIC subsidiary is a member of the Federal Home Loan Bank of San Francisco (“FHLB”). Membership in the FHLB provides PSIC access to collateralized advances, which can be drawn for general corporate purposes and used to enhance liquidity management. All borrowings are fully secured by a pledge of specific investment securities of PSIC and the borrowing capacity is equal to 5% of PSIC’s statutory admitted assets. All advances have a predetermined term and the interest rate varies based on the term of the advance.

As of March 31, 2023, the Company had $36.4 million of borrowings outstanding through the FHLB at the overnight rate of 5.04%. Interest expense on the FHLB line of credit was $0.4 million for the three months ended March 31, 2023.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

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-Name Accounting Standards Codification
-Topic 470
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-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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-SubTopic 20
-Section 50
-Paragraph 1C
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495334-112611

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1E
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495348-112611

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1I
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495371-112611

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 470
-SubTopic 20
-Section 50
-Paragraph 1B
-Subparagraph (i)
-URI https://asc.fasb.org/extlink&oid=123466505&loc=SL123495323-112611

+ Details

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Fixed maturity securities available for sale, amortized cost
Fixed maturity securities available for sale, amortized cost	$ 594,736	$ 561,580
Equity securities, cost
Equity securities, cost	$ 42,352	$ 42,352
Preferred stock
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
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)	24,942,196	25,027,467
Common stock, shares outstanding (in shares)	24,942,196	25,027,467

Investments - Net Realized and Unrealized Investment Gains and Losses (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Net realized and unrealized investment gains and losses
Gains on sales of fixed maturity securities	$ 28	$ 2
Total realized gains	28	2
Losses on sales of fixed maturity securities	(3)
Total realized losses	(3)
Net realized investment gains	25	2
Change in allowance for credit losses	(659)
Net unrealized gains (losses) on equity securities	780	(1,280)
Net realized and unrealized gains (losses) on investments	146	(1,278)
Proceeds from sales of fixed maturity securities
Proceeds from the sale of fixed maturity securities	$ 5,100	$ 4,800

Stockholders' Equity - 2019 Equity Incentive Plan (Details) - 2019 Equity Incentive Plan - shares	Mar. 31, 2023	Apr. 16, 2019
Stock-Based Compensation
Shares authorized (in shares)	3,143,477	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 (as a percent)		3.00%

Stockholders' Equity - Restricted Stock Units (Details) - Restricted Stock Units	3 Months Ended
	Mar. 31, 2023 $ / shares shares
Number of shares
Outstanding at beginning of period (in shares) \| shares	271,951
Granted (in shares) \| shares	123,396
Vested (in shares) \| shares	(35,728)
Forfeited (in shares) \| shares	(4,385)
Non vested at end of period (in shares) \| shares	355,234
Weighted-average grant date fair value
Outstanding at beginning of period (in dollars per share) \| $ / shares	$ 68.90
Granted (in dollars per share) \| $ / shares	51.32
Vested (in dollars per share) \| $ / shares	59.92
Forfeited (in dollars per share) \| $ / shares	52.83
Non vested outstanding at end of period (in dollars per share) \| $ / shares	$ 63.89

Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2023

Earnings Per Share

Schedule of earnings per share of common stock


	Three months ended March 31,
	2023		2022

	(in thousands, except shares and per share data)
Net income	$	17,313	$	14,537
Weighted average common shares outstanding:
Basic		24,969,703		25,362,179
Common Share equivalents		473,198		537,111
Diluted		25,442,902		25,899,290

Earnings per share:
Basic	$	0.69	$	0.57
Diluted	$	0.68	$	0.56

Credit Agreements - FHLB Line of Credit (Details) $ in Millions	3 Months Ended
	Mar. 31, 2023 USD ($)
Credit Agreements
Percentage of borrowing capacity	5.00%
Federal home loan bank, advances, branch of FHLB bank, interest rate	5.04%
Interest expense on the FHLB Line of Credit	$ 0.4
Federal home loan bank, advances, branch of FHLB bank, amount of advances	$ 36.4

Summary of Operations and Basis of Presentation (Policies)	3 Months Ended
	Mar. 31, 2023
Summary of Operations and Basis of Presentation
Summary of Operations	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	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, 2022, filed with the SEC on March 1, 2023 (the “2022 Annual Report on Form 10-K”). 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	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 Recently adopted accounting pronouncements The Company has not adopted any new accounting guidance during the three months ended March 31, 2023. Recently issued accounting pronouncements not yet adopted There are not currently any recent accounting pronouncements or pending accounting guidance that have significance, or potential significance, to the Company’s consolidated financial statements.

Reserve for Losses and Loss Adjustment Expenses

3 Months Ended

Mar. 31, 2023

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 March 31,
	2023		2022

		(in thousands)
Reserve for losses and LAE net of reinsurance recoverables at beginning of period	$	77,520	$	45,419
Add: Incurred losses and LAE, net of reinsurance, related to:
Current year		17,300		13,449
Prior years		3,352		1,505
Total incurred		20,652		14,954
Deduct: Loss and LAE payments, net of reinsurance, related to:
Current year		1,393		1,490
Prior years		15,413		7,497
Total payments		16,806		8,987
Reserve for losses and LAE net of reinsurance recoverables at end of period		81,366		51,386
Add: Reinsurance recoverables on unpaid losses and LAE at end of period		183,601		113,726
Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at end of period	$	264,967	$	165,112

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 prior year development of $3.4 and $1.5 million during the three months ended March 31, 2023 and 2022, respectively.

Adverse prior year development during the three months ended March 31, 2023 was primarily due to higher than anticipated severity of attritional losses, offset by lower than anticipated severity of catastrophe losses. Adverse prior year development during the three months ended March 31, 2022 was primarily due to higher than anticipated severity of attritional losses from prior years.

Credit Agreements - Floating Rate Notes (Details) - Revolving credit facility - USD ($) $ in Millions	1 Months Ended	3 Months Ended
	Dec. 31, 2021	Mar. 31, 2023
Long-term debt
Percentage of unused line fee payable on unborrowed amount	0.25%
Line of credit facility outstanding		$ 35.0
Interest rate (as a percent)		6.55%
Interest expense		$ 0.6
Line of credit prepayment premium	$ 0.0
U.S. Bank Credit Agreement
Long-term debt
Maximum credit facility borrowing amount	$ 100.0
Secured Overnight Financing Rate
Long-term debt
Interest rate spread (as a percent)	1.75%
Alternate Base Rate
Long-term debt
Interest rate spread (as a percent)	0.75%

Reserve for Losses and Loss Adjustment Expenses (Tables)

3 Months Ended

Mar. 31, 2023

Reserve for Losses and Loss Adjustment Expenses

Schedule of reconciliation of changes in the ending reserve balances for losses and loss adjustment expenses ("LAE")


	Three Months Ended March 31,
	2023		2022

		(in thousands)
Reserve for losses and LAE net of reinsurance recoverables at beginning of period	$	77,520	$	45,419
Add: Incurred losses and LAE, net of reinsurance, related to:
Current year		17,300		13,449
Prior years		3,352		1,505
Total incurred		20,652		14,954
Deduct: Loss and LAE payments, net of reinsurance, related to:
Current year		1,393		1,490
Prior years		15,413		7,497
Total payments		16,806		8,987
Reserve for losses and LAE net of reinsurance recoverables at end of period		81,366		51,386
Add: Reinsurance recoverables on unpaid losses and LAE at end of period		183,601		113,726
Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at end of period	$	264,967	$	165,112

Investments - Net Investment Income (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Net investment income
Interest income	$ 5,060	$ 2,558
Dividend income	181	155
Investment expense	(121)	(134)
Net investment income	$ 5,120	$ 2,579

Fair Value Measurements - Financial Assets and Liabilities (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Assets:
Fair Value	$ 554,489	$ 515,064
Equity securities	39,356	38,576
U.S. Governments
Assets:
Fair Value	49,649	48,551
States, territories, and possessions
Assets:
Fair Value	5,514	5,354
Political subdivisions
Assets:
Fair Value	4,434	4,298
Special revenue excluding mortgage/asset-backed securities
Assets:
Fair Value	34,241	32,799
Corporate and other
Assets:
Fair Value	281,044	254,095
Mortgage/asset-backed securities
Assets:
Fair Value	179,607	169,967
Fair Value, Measurements, Recurring
Assets:
Equity securities	39,356	38,576
Cash, cash equivalents, and restricted cash	80,360	68,164
Total assets	674,205	621,804
Fair Value, Measurements, Recurring \| U.S. Governments
Assets:
Fair Value	49,649	48,551
Fair Value, Measurements, Recurring \| States, territories, and possessions
Assets:
Fair Value	5,514	5,354
Fair Value, Measurements, Recurring \| Political subdivisions
Assets:
Fair Value	4,434	4,298
Fair Value, Measurements, Recurring \| Special revenue excluding mortgage/asset-backed securities
Assets:
Fair Value	34,241	32,799
Fair Value, Measurements, Recurring \| Corporate and other
Assets:
Fair Value	281,044	254,095
Fair Value, Measurements, Recurring \| Mortgage/asset-backed securities
Assets:
Fair Value	179,607	169,967
Fair Value, Measurements, Recurring \| Fair Value, Inputs, Level 1
Assets:
Equity securities	39,356	38,576
Cash, cash equivalents, and restricted cash	80,360	68,164
Total assets	119,716	106,740
Fair Value, Measurements, Recurring \| Fair Value, Inputs, Level 2
Assets:
Total assets	554,489	515,064
Fair Value, Measurements, Recurring \| Fair Value, Inputs, Level 2 \| U.S. Governments
Assets:
Fair Value	49,649	48,551
Fair Value, Measurements, Recurring \| Fair Value, Inputs, Level 2 \| States, territories, and possessions
Assets:
Fair Value	5,514	5,354
Fair Value, Measurements, Recurring \| Fair Value, Inputs, Level 2 \| Political subdivisions
Assets:
Fair Value	4,434	4,298
Fair Value, Measurements, Recurring \| Fair Value, Inputs, Level 2 \| Special revenue excluding mortgage/asset-backed securities
Assets:
Fair Value	34,241	32,799
Fair Value, Measurements, Recurring \| Fair Value, Inputs, Level 2 \| Corporate and other
Assets:
Fair Value	281,044	254,095
Fair Value, Measurements, Recurring \| Fair Value, Inputs, Level 2 \| Mortgage/asset-backed securities
Assets:
Fair Value	$ 179,607	$ 169,967

Underwriting Information - Gross Written Premiums by Product (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Gross written premiums
Amount	$ 250,112	$ 170,934
% of GWP	100.00%	100.00%
Fronting Premiums
Gross written premiums
Amount	$ 91,755	$ 29,845
% of GWP	36.70%	17.50%
Residential Earthquake
Gross written premiums
Amount	$ 55,725	$ 46,336
% of GWP	22.30%	27.10%
Commercial Earthquake
Gross written premiums
Amount	$ 37,770	$ 25,144
% of GWP	15.10%	14.70%
Inland Marine
Gross written premiums
Amount	$ 31,049	$ 18,237
% of GWP	12.40%	10.70%
Casualty
Gross written premiums
Amount	$ 11,733	$ 5,007
% of GWP	4.70%	2.90%
Commercial All Risk
Gross written premiums
Amount	$ 8,376	$ 11,210
% of GWP	3.30%	6.60%
Hawaii Hurricane
Gross written premiums
Amount	$ 8,073	$ 6,914
% of GWP	3.20%	4.00%
Residential Flood
Gross written premiums
Amount	$ 4,235	$ 2,993
% of GWP	1.70%	1.80%
Specialty Homeowners
Gross written premiums
Amount		$ 16,284
Amount, net	$ (59)
% of GWP		9.50%
Others
Gross written premiums
Amount	$ 1,455	$ 8,964
% of GWP	0.60%	5.20%

Reserve for Losses and Loss Adjustment Expenses - Adverse (Favorable) Development (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Adverse (Favorable) Development
Adverse (favorable) prior year development	$ 3,352	$ 1,505

Stockholders' Equity

3 Months Ended

Mar. 31, 2023

Stockholders' Equity

Stockholders' Equity

5. Stockholders’ Equity

Common stock reserved for future issuance

Common stock reserved for future issuance consists of the following as of March 31, 2023:


Stock options outstanding under 2019 Equity Incentive Plan	873,346
Restricted stock units outstanding under 2019 Equity Incentive Plan	355,234
Performance stock units outstanding under 2019 Equity Incentive Plan, at target	426,359
Shares authorized for future issuance under 2019 Equity Incentive Plan	3,143,477
Shares authorized for future issuance under 2019 Employee Stock Purchase Plan	1,140,126
Total	5,938,542

Stock based compensation

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

Stock-based compensation expense is recognized on a straight-line basis over the vesting period of equity-based awards. For performance stock units (“PSUs”), any changes to expense resulting from differences in actual performance versus target are recognized over the remaining vesting period of the 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 and comprehensive income.

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 common stock on the grant date. Stock options vest over a two to four-year period with a portion vesting on the first anniversary of the grant date and the remainder vesting monthly over the remaining period, subject to continued service. Stock options expire ten years after the grant date.

The following table summarizes stock option transactions for the three months ended March 31, 2023:


	Number of shares		Weighted-average exercise price	Weighted-average remaining contractual term (in years)		Aggregate intrinsic value (in thousands)
Outstanding at January 1, 2023	882,892	$	33.85	-	$	-
Options granted	-		-
Options exercised	(5,957)		15.24
Options canceled	(3,589)		64.91
Outstanding at March 31, 2023	873,346	$	33.85	6.63	$	23,374
Vested and Exercisable at March 31, 2023	724,939	$	28.15	6.33	$	22,598

As of March 31, 2023, the Company had approximately $2.9 million of total unrecognized stock-based compensation expense related to stock options expected to be recognized over a weighted-average period of 1.47 years.

Restricted Stock Units

RSUs are valued using the closing price of the Company’s common stock on their grant date. The Company has issued RSUs with vesting periods of one to five years. All vesting is subject to continued service.

The following table summarizes RSU transactions for the three months ended March 31, 2023:


	Number of shares		Weighted-average grant date fair value
Outstanding at January 1, 2023	271,951	$	68.90
Granted	123,396		51.32
Released	(35,728)		59.92
Forfeited	(4,385)		52.83
Non-vested outstanding at March 31, 2023	355,234	$	63.89

As of March 31, 2023, the Company had approximately $19.7 million of total unrecognized stock-based compensation expense related to RSUs expected to be recognized over a weighted-average period of 2.8 years.

Performance Stock Units

The Company issues PSUs with a combination of service, performance, and market conditions.

The majority of PSUs were issued via grants made to certain executives during 2021. These PSUs are earned based on the achievement of stock price milestones. If the Company’s stock price reaches and remains at certain milestones for 30 days, the PSUs shall become earned units and will vest upon completion of a requisite service period of approximately five years from the date of grant. As of March 31, 2023, none of the stock price milestones have been achieved.

For other PSUs outstanding, vesting of PSUs requires a period of future service and the number of shares that vest depends on performance relative to predetermined targets of the Company’s Gross Written Premiums and Adjusted Return on Equity as set by the Compensation Committee. Prior to 2023, the PSU’s performance period was the fiscal year of the grant. Beginning in 2023, the PSU’s performance period is primarily a three-year period beginning with the grant date. At the end of the performance period, the actual results are measured against the predetermined targets to determine the number of PSUs to be earned as compensation. The earned PSUs are then subject to a required service period of approximately three years from the grant date before vesting and being issued as common stock.

The following table summarizes PSU transactions for the three months ended March 31, 2023:


	Number of shares		Weighted-average grant date fair value
Outstanding at January 1, 2023	383,103	$	37.62
Granted	44,354		51.25
Vested	—		—
Forfeited	(1,098)		55.36
Non-vested outstanding at March 31, 2023	426,359	$	38.99

The PSU grants above represent the number of shares that would vest based on achievement of all stock price milestones in the 2021 executive stock grants and the 100% achievement of the predetermined performance conditions for the other PSU grants. The actual number of PSUs which will vest is subject to adjustment based on the Company’s actual stock price performance and financial performance relative to the predetermined targets. As of March 31, 2023,

the Company had approximately $12.5 million of total unrecognized stock-based compensation expense related to PSUs expected to be recognized over a weighted-average period of 3.23 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 7,724 shares pursuant to the ESPP during the three months ended March 31, 2023.

Share repurchases

In January 2022, the Board of Directors approved a new share repurchase program which replaced the existing program and authorized the repurchase of up to $100 million of outstanding shares of common stock over the period ending on March 31, 2024.

The Company purchased 134,680 shares for $6.8 million during the three months ended March 31, 2023. The Company accounts for share repurchases by charging the excess of repurchase price over the common stock’s par value entirely to retained earnings. All repurchased shares are retired and become authorized but unissued shares.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-URI https://asc.fasb.org/topic&trid=2208762

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI https://asc.fasb.org/extlink&oid=120397183&loc=d3e187085-122770

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
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Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
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-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Topic 505
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-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
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-Paragraph 18
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 16
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496180-112644

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (i)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(e)(1))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 40
-Section 50
-Paragraph 6
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126731327&loc=SL126733271-114008

+ Details

Stockholders' Equity - Reserved for Future Issuance (Details) - shares	Mar. 31, 2023	Dec. 31, 2022	Apr. 16, 2019
Common stock reserved for future issuance
Stock options outstanding (in shares)	873,346	882,892
Total (in shares)	5,938,542
2019 Equity Incentive Plan
Common stock reserved for future issuance
Stock options outstanding (in shares)	873,346
Shares authorized for future issuance (in shares)	3,143,477		2,400,000
2019 Employee Stock Purchase Plan
Common stock reserved for future issuance
Shares authorized for future issuance (in shares)	1,140,126
Restricted Stock Units
Common stock reserved for future issuance
Stock units outstanding (in shares)	355,234	271,951
Restricted Stock Units \| 2019 Equity Incentive Plan
Common stock reserved for future issuance
Stock units outstanding (in shares)	355,234
Performance Stock Units
Common stock reserved for future issuance
Stock units outstanding (in shares)	426,359	383,103
Performance Stock Units \| 2019 Equity Incentive Plan
Common stock reserved for future issuance
Stock units outstanding (in shares)	426,359

Investments

3 Months Ended

Mar. 31, 2023

Investments

Investments

2. Investments

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


			Gross		Gross		Allowance
	Amortized		Unrealized		Unrealized		for		Fair
March 31, 2023	Cost or Cost		Gains		Losses		Credit Losses		Value

	(in thousands)
Fixed maturities:
U.S. Governments	$	51,405	$	7	$	(1,763)	$	—	$	49,649
States, territories, and possessions		5,852		128		(466)		—		5,514
Political subdivisions		4,915		—		(481)		—		4,434
Special revenue excluding mortgage/asset-backed securities		37,698		112		(3,569)		—		34,241
Corporate and other		302,810		363		(21,233)		(896)		281,044
Mortgage/asset-backed securities		192,056		454		(12,903)		—		179,607
Total available-for-sale investments	$	594,736	$	1,064	$	(40,415)	$	(896)	$	554,489


			Gross		Gross		Allowance
	Amortized		Unrealized		Unrealized		for		Fair
December 31, 2022	Cost or Cost		Gains		Losses		Credit Losses		Value

	(in thousands)
Fixed maturities:
U.S. Governments	$	50,802	$	2	$	(2,253)	$	—	$	48,551
States, territories, and possessions		5,857		49		(552)		—		5,354
Political subdivisions		4,919		—		(621)		—		4,298
Special revenue excluding mortgage/asset-backed securities		37,260		26		(4,487)		—		32,799
Corporate and other		278,164		79		(23,912)		(236)		254,095
Mortgage/asset-backed securities		184,578		251		(14,862)		—		169,967
Total available-for-sale investments	$	561,580	$	407	$	(46,687)	$	(236)	$	515,064

Security holdings in an unrealized loss position

As of March 31, 2023, the Company held 538 fixed maturity securities in an unrealized loss position with a total estimated fair value of $497.9 million and total gross unrealized losses of $40.4 million. As of December 31, 2022, the Company held 543 fixed maturity securities in an unrealized loss position with a total estimated fair value of $484.7 million and total gross unrealized losses of $46.9 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 March 31, 2023 and December 31, 2022, are as follows:


	Less Than 12 Months				More Than 12 Months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
March 31, 2023	Value		Losses		Value		Losses		Value		Losses

	(in thousands)
Fixed maturity securities:
U.S. Governments	$	25,586	$	(391)	$	23,438	$	(1,372)	$	49,024	$	(1,763)
States, territories, and possessions		3,310		(466)		—		—		3,310		(466)
Political subdivisions		454		(21)		3,980		(460)		4,434		(481)
Special revenue excluding mortgage/asset-backed securities		8,050		(595)		22,928		(2,974)		30,978		(3,569)
Corporate and other		136,179		(6,630)		120,285		(14,603)		256,464		(21,233)
Mortgage/asset-backed securities		77,660		(3,414)		76,058		(9,489)		153,718		(12,903)
Total	$	251,239	$	(11,517)	$	246,689	$	(28,898)	$	497,928	$	(40,415)


	Less Than 12 Months				More Than 12 Months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
December 31, 2022	Value		Losses		Value		Losses		Value		Losses

	(in thousands)
Fixed maturity securities:
U.S. Governments	$	41,077	$	(1,523)	$	6,853	$	(730)	$	47,930	$	(2,253)
States, territories, and possessions		3,227		(552)		—		—		3,227		(552)
Political subdivisions		4,298		(621)		—		—		4,298		(621)
Special revenue excluding mortgage/asset-backed securities		25,091		(3,287)		5,080		(1,200)		30,171		(4,487)
Corporate and other		192,185		(15,667)		55,605		(8,481)		247,790		(24,148)
Mortgage/asset-backed securities		118,815		(9,908)		32,448		(4,954)		151,263		(14,862)
Total	$	384,693	$	(31,558)	$	99,986	$	(15,365)	$	484,679	$	(46,923)

The Company reviews all securities with unrealized losses on a quarterly basis to assess whether the decline in the securities fair value necessitates the recognition of an allowance for credit losses. The Company considers numerous factors in its review as described in Footnote 1 of the Notes to the Consolidated Financial Statements in the 2022 Annual Report on Form 10-K.

The Company has recorded an allowance for credit losses for two investment securities. Based on the Company’s review as of March 31, 2023, for the remainder of securities, 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. 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.

Contractual maturities of available-for-sale fixed maturity securities

The amortized cost and fair value of fixed maturity securities at March 31, 2023, by contractual maturity, are shown below.


	Amortized		Fair
	Cost		Value

	(in thousands)
Due within one year	$	47,423	$	45,867
Due after one year through five years		184,515		173,737
Due after five years through ten years		139,084		127,547
Due after ten years		31,658		27,731
Mortgage and asset-backed securities		192,056		179,607
	$	594,736	$	554,489

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
	March 31,
	2023		2022

	(in thousands)
Interest income	$	5,060	$	2,558
Dividend income		181		155
Investment expense		(121)		(134)
Net investment income	$	5,120	$	2,579

Net realized and unrealized investment gains and losses

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


	Three Months Ended
	March 31,
	2023		2022

		(in thousands)
Realized gains:
Gains on sales of fixed maturity securities	$	28	$	2
Gains on sales of equity securities		—		—
Total realized gains		28		2
Realized losses:
Losses on sales of fixed maturity securities		(3)		—
Losses on sales of equity securities		—		—
Total realized losses		(3)		—
Net realized investment gains		25		2
Change in allowance for credit losses		(659)		—
Net unrealized gains (losses) on equity securities		780		(1,280)
Net realized and unrealized gains (losses) on investments	$	146	$	(1,278)

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 $5.1 million and $4.8 million for the three months ended March 31, 2023 and 2022, 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. As of March 31, 2023 and December 31, 2022, the carrying value of securities on deposit with state regulatory authorities was $9.6 million and $8.5 million, respectively.

Investments - Available for Sale Investments (Details) - USD ($) $ in Thousands	Mar. 31, 2023	Dec. 31, 2022
Available for sale investments
Amortized Cost or Cost	$ 594,736	$ 561,580
Gross Unrealized Gains	1,064	407
Gross Unrealized Losses	(40,415)	(46,687)
Allowance for Credit Losses	(896)	(236)
Fair Value	554,489	515,064
U.S. Governments
Available for sale investments
Amortized Cost or Cost	51,405	50,802
Gross Unrealized Gains	7	2
Gross Unrealized Losses	(1,763)	(2,253)
Fair Value	49,649	48,551
States, territories, and possessions
Available for sale investments
Amortized Cost or Cost	5,852	5,857
Gross Unrealized Gains	128	49
Gross Unrealized Losses	(466)	(552)
Fair Value	5,514	5,354
Political subdivisions
Available for sale investments
Amortized Cost or Cost	4,915	4,919
Gross Unrealized Losses	(481)	(621)
Fair Value	4,434	4,298
Special revenue excluding mortgage/asset-backed securities
Available for sale investments
Amortized Cost or Cost	37,698	37,260
Gross Unrealized Gains	112	26
Gross Unrealized Losses	(3,569)	(4,487)
Fair Value	34,241	32,799
Corporate and other
Available for sale investments
Amortized Cost or Cost	302,810	278,164
Gross Unrealized Gains	363	79
Gross Unrealized Losses	(21,233)	(23,912)
Allowance for Credit Losses	(896)	(236)
Fair Value	281,044	254,095
Mortgage/asset-backed securities
Available for sale investments
Amortized Cost or Cost	192,056	184,578
Gross Unrealized Gains	454	251
Gross Unrealized Losses	(12,903)	(14,862)
Fair Value	$ 179,607	$ 169,967

Stockholders' Equity - Performance Stock Units (Details) - Performance Stock Units	3 Months Ended
	Mar. 31, 2023 $ / shares shares
Number of shares
Outstanding at beginning of period (in shares) \| shares	383,103
Granted (in shares) \| shares	44,354
Forfeited (in shares) \| shares	(1,098)
Non vested at end of period (in shares) \| shares	426,359
Weighted-average grant date fair value
Outstanding at beginning of period (in dollars per share) \| $ / shares	$ 37.62
Granted (in dollars per share) \| $ / shares	51.25
Forfeited (in dollars per share) \| $ / shares	55.36
Non vested outstanding at end of period (in dollars per share) \| $ / shares	$ 38.99

Investments (Tables)

3 Months Ended

Mar. 31, 2023

Investments

Schedule of available-for-sale investments


			Gross		Gross		Allowance
	Amortized		Unrealized		Unrealized		for		Fair
March 31, 2023	Cost or Cost		Gains		Losses		Credit Losses		Value

	(in thousands)
Fixed maturities:
U.S. Governments	$	51,405	$	7	$	(1,763)	$	—	$	49,649
States, territories, and possessions		5,852		128		(466)		—		5,514
Political subdivisions		4,915		—		(481)		—		4,434
Special revenue excluding mortgage/asset-backed securities		37,698		112		(3,569)		—		34,241
Corporate and other		302,810		363		(21,233)		(896)		281,044
Mortgage/asset-backed securities		192,056		454		(12,903)		—		179,607
Total available-for-sale investments	$	594,736	$	1,064	$	(40,415)	$	(896)	$	554,489


			Gross		Gross		Allowance
	Amortized		Unrealized		Unrealized		for		Fair
December 31, 2022	Cost or Cost		Gains		Losses		Credit Losses		Value

	(in thousands)
Fixed maturities:
U.S. Governments	$	50,802	$	2	$	(2,253)	$	—	$	48,551
States, territories, and possessions		5,857		49		(552)		—		5,354
Political subdivisions		4,919		—		(621)		—		4,298
Special revenue excluding mortgage/asset-backed securities		37,260		26		(4,487)		—		32,799
Corporate and other		278,164		79		(23,912)		(236)		254,095
Mortgage/asset-backed securities		184,578		251		(14,862)		—		169,967
Total available-for-sale investments	$	561,580	$	407	$	(46,687)	$	(236)	$	515,064

Schedule of aggregate fair value and gross unrealized losses


	Less Than 12 Months				More Than 12 Months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
March 31, 2023	Value		Losses		Value		Losses		Value		Losses

	(in thousands)
Fixed maturity securities:
U.S. Governments	$	25,586	$	(391)	$	23,438	$	(1,372)	$	49,024	$	(1,763)
States, territories, and possessions		3,310		(466)		—		—		3,310		(466)
Political subdivisions		454		(21)		3,980		(460)		4,434		(481)
Special revenue excluding mortgage/asset-backed securities		8,050		(595)		22,928		(2,974)		30,978		(3,569)
Corporate and other		136,179		(6,630)		120,285		(14,603)		256,464		(21,233)
Mortgage/asset-backed securities		77,660		(3,414)		76,058		(9,489)		153,718		(12,903)
Total	$	251,239	$	(11,517)	$	246,689	$	(28,898)	$	497,928	$	(40,415)


	Less Than 12 Months				More Than 12 Months				Total
	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
December 31, 2022	Value		Losses		Value		Losses		Value		Losses

	(in thousands)
Fixed maturity securities:
U.S. Governments	$	41,077	$	(1,523)	$	6,853	$	(730)	$	47,930	$	(2,253)
States, territories, and possessions		3,227		(552)		—		—		3,227		(552)
Political subdivisions		4,298		(621)		—		—		4,298		(621)
Special revenue excluding mortgage/asset-backed securities		25,091		(3,287)		5,080		(1,200)		30,171		(4,487)
Corporate and other		192,185		(15,667)		55,605		(8,481)		247,790		(24,148)
Mortgage/asset-backed securities		118,815		(9,908)		32,448		(4,954)		151,263		(14,862)
Total	$	384,693	$	(31,558)	$	99,986	$	(15,365)	$	484,679	$	(46,923)

Schedule of contractual maturities of available-for-sale securities


	Amortized		Fair
	Cost		Value

	(in thousands)
Due within one year	$	47,423	$	45,867
Due after one year through five years		184,515		173,737
Due after five years through ten years		139,084		127,547
Due after ten years		31,658		27,731
Mortgage and asset-backed securities		192,056		179,607
	$	594,736	$	554,489

Schedule of net investment income


	Three Months Ended
	March 31,
	2023		2022

	(in thousands)
Interest income	$	5,060	$	2,558
Dividend income		181		155
Investment expense		(121)		(134)
Net investment income	$	5,120	$	2,579

Schedule of net realized and unrealized investment gains and losses


	Three Months Ended
	March 31,
	2023		2022

		(in thousands)
Realized gains:
Gains on sales of fixed maturity securities	$	28	$	2
Gains on sales of equity securities		—		—
Total realized gains		28		2
Realized losses:
Losses on sales of fixed maturity securities		(3)		—
Losses on sales of equity securities		—		—
Total realized losses		(3)		—
Net realized investment gains		25		2
Change in allowance for credit losses		(659)		—
Net unrealized gains (losses) on equity securities		780		(1,280)
Net realized and unrealized gains (losses) on investments	$	146	$	(1,278)

Underwriting Information - Gross Written Premiums by Insurance Subsidiary (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2023	Mar. 31, 2022
Gross written premiums
Amount	$ 250,112	$ 170,934
% of GWP	100.00%	100.00%
PSIC
Gross written premiums
Amount	$ 150,704	$ 104,004
% of GWP	60.30%	60.80%
PESIC
Gross written premiums
Amount	$ 99,408	$ 66,930
% of GWP	39.70%	39.20%