Palomar Holdings has touted its resilience and strategic vision in the reinsurance sector, after the successful renewal of key reinsurance treaties.
CEO Mac Armstrong explained that the renewals, effective from January 1, included a commercial earthquake quota share, an earthquake-only excess of loss (XOL) layer, and a casualty quota share treaty. These renewals were notable not just for their continuation but for the improved terms they secured.
The earthquake-related treaties saw a risk-adjusted rate decrease of approximately 5%, while the casualty quota share treaty experienced an increase in ceding commission. These developments point to favorable market dynamics.
Looking ahead, Armstrong expressed a cautiously optimistic view of the reinsurance market, particularly for the upcoming June 1 renewal period. This optimism is based on expected modest price increases, which are anticipated to drive net earned premium growth and margin expansion for Palomar.
As for its financials, Palomar reported a net income of $79.2 million for the full year 2023, up from $52.2 million in 2022. This financial performance, Armstrong said, underscores the company’s successful strategic initiatives in the reinsurance domain, highlighting its ability to achieve growth amid market fluctuations.
Gross written premiums saw a 26.8% increase to $303.2 million in the fourth quarter, up from $239.1 million in the fourth quarter of 2022. Meanwhile, net earned premiums rose by 14.0% compared to the same quarter the previous year.
The fourth quarter experienced losses and loss adjustment expenses amounting to $17.9 million, primarily from non-catastrophe attritional losses. The loss ratio for this period stood at 19.1%, entirely from attritional losses, a decrease from last year’s fourth quarter loss ratio of 22.4%, which included an attritional loss ratio of 20.1% and a catastrophe loss ratio of 2.3%.
Underwriting income for the fourth quarter reached $24.2 million, leading to a combined ratio of 74.2%. This was an improvement over the previous year’s fourth quarter, which saw underwriting income of $20.1 million and a combined ratio of 75.5%.
Additionally, the company reported an adjusted underwriting income of $29.3 million for the fourth quarter, resulting in an adjusted combined ratio of 68.8%, compared to the prior year’s adjusted underwriting income of $23.5 million and an adjusted combined ratio of 71.4%.
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