Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2020 | Mar. 05, 2021 | Jun. 30, 2020 | |
Cover [Abstract] | |||
Entity Central Index Key | 0001761312 | ||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2020 | ||
Document Transition Report | false | ||
Entity File Number | 001-38873 | ||
Entity Registrant Name | Palomar Holdings, Inc. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 83-3972551 | ||
Entity Address, Address Line One | 7979 Ivanhoe Avenue | ||
Entity Address, Address Line Two | Suite 500 | ||
Entity Address, City or Town | La Jolla | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 92037 | ||
City Area Code | 619 | ||
Local Phone Number | 567-5290 | ||
Title of 12(b) Security | Common Stock, par value $0.0001 per share | ||
Entity Listing, Par Value Per Share | $ 0.0001 | ||
Trading Symbol | PLMR | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
ICFR Auditor Attestation Flag | true | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 2,053,685,544 | ||
Entity Common Stock, Shares Outstanding | 25,570,868 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2020 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Investments: | ||
Fixed maturity securities available for sale, at fair value (amortized cost: $381,279 in 2020; $211,278 in 2019) | $ 397,987 | $ 217,151 |
Equity securities, at fair value (cost: $22,291 in 2020; $21,336 in 2019) | 24,322 | 22,328 |
Total investments | 422,309 | 239,479 |
Cash and cash equivalents | 33,538 | 33,119 |
Restricted cash | 248 | 230 |
Accrued investment income | 2,545 | 1,386 |
Premium receivable | 48,842 | 36,237 |
Deferred policy acquisition costs | 35,481 | 25,201 |
Reinsurance recoverable on unpaid losses and loss adjustment expenses | 94,566 | 12,952 |
Reinsurance recoverable on paid losses and loss adjustment expenses | 10,162 | 4,303 |
Ceded unearned premiums | 35,031 | 26,105 |
Prepaid expenses and other assets | 34,119 | 14,861 |
Property and equipment, net | 739 | 845 |
Intangible assets | 11,512 | 744 |
Total assets | 729,092 | 395,462 |
Liabilities: | ||
Accounts payable and other accrued liabilities | 20,730 | 13,555 |
Reserve for losses and loss adjustment expenses | 129,036 | 16,821 |
Unearned premiums | 183,489 | 130,373 |
Ceded premium payable | 22,233 | 11,383 |
Funds held under reinsurance treaty | 4,515 | 1,658 |
Income and excise taxes payable | 1,117 | |
Deferred tax liabilities, net | 5,376 | 1,999 |
Total liabilities | 365,379 | 176,906 |
Stockholders' equity: | ||
Preferred stock, $0.0001 par value, 5,000,000 shares authorized as of December 31, 2020 and December 31, 2019, 0 shares issued and outstanding as of December 31, 2020 and December 31, 2019 | ||
Common stock, $0.0001 par value, 500,000,000 shares authorized, 25,525,796 and 23,468,750 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively | 3 | 2 |
Additional paid-in capital | 310,507 | 180,012 |
Accumulated other comprehensive income | 13,246 | 4,686 |
Retained earnings | 39,957 | 33,856 |
Total stockholders' equity | 363,713 | 218,556 |
Total liabilities and stockholders' equity | $ 729,092 | $ 395,462 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Condensed Consolidated Balance Sheets | ||
Fixed maturity securities available for sale, amortized cost | $ 381,279 | $ 211,278 |
Equity securities, cost | $ 22,291 | $ 21,336 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 25,525,796 | 23,468,750 |
Common stock, shares outstanding (in shares) | 25,525,796 | 23,468,750 |
Consolidated Statements of Inco
Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Revenues: | |||
Gross written premiums | $ 354,360 | $ 251,961 | $ 154,891 |
Ceded written premiums | (155,102) | (108,332) | (82,949) |
Net written premiums | 199,258 | 143,629 | 71,942 |
Change in unearned premiums | (44,190) | (43,422) | (2,045) |
Net earned premiums | 155,068 | 100,207 | 69,897 |
Net investment income | 8,612 | 5,975 | 3,238 |
Net realized and unrealized gains (losses) on investments | 1,488 | 4,443 | (2,569) |
Commission and other income | 3,295 | 2,671 | 2,405 |
Total revenues | 168,463 | 113,296 | 72,971 |
Expenses: | |||
Losses and loss adjustment expenses | 64,115 | 5,593 | 6,274 |
Acquisition expenses | 64,041 | 37,259 | 28,224 |
Other underwriting expenses (includes stock-based compensation of $2,167, $24,103 and $0 for the years ended December 31, 2020, 2019 and 2018, respectively) | 34,084 | 51,299 | 17,957 |
Interest expense | 1,068 | 2,303 | |
Total expenses | 162,240 | 95,219 | 54,758 |
Income before income taxes | 6,223 | 18,077 | 18,213 |
Income tax expense (benefit) | (34) | 7,456 | (6) |
Net income | 6,257 | 10,621 | 18,219 |
Other comprehensive income, net: | |||
Net unrealized gains (losses) on securities available for sale, net of taxes | 8,560 | 5,249 | (341) |
Total comprehensive income | $ 14,817 | $ 15,870 | $ 17,878 |
Per Share Data: | |||
Basic earnings per share (in dollars per share) | $ 0.25 | $ 0.49 | $ 1.07 |
Diluted (in dollars per share) | $ 0.24 | $ 0.49 | $ 1.07 |
Weighted-average common shares outstanding: | |||
Basic (in shares) | 24,872,251 | 21,501,541 | 17,000,000 |
Diluted (in shares) | 25,598,647 | 21,834,934 | 17,000,000 |
Consolidated Statements of In_2
Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) | |||
Stock-Based Compensation Expense | $ 2,167 | $ 24,103 | $ 0 |
Consolidated Statements of Shar
Consolidated Statements of Shareholder’s Equity - USD ($) $ in Thousands | Common StockStock Issued in January | Common StockStock Issued in June | Common Stock | Additional Paid-In CapitalStock Issued in January | Additional Paid-In CapitalStock Issued in June | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss)Cumulative Effect, Period of Adoption, Adjustment | Accumulated Other Comprehensive Income (Loss) | Retained EarningsCumulative Effect, Period of Adoption, Adjustment | Retained Earnings | Stock Issued in January | Stock Issued in June | Cumulative Effect, Period of Adoption, Adjustment | Total |
Beginning balance at Dec. 31, 2017 | $ 2 | $ 68,498 | $ (3,215) | $ 2,993 | $ 3,215 | $ 6,921 | $ 78,414 | |||||||
Beginning balance (in shares) at Dec. 31, 2017 | 17,000,000 | |||||||||||||
Changes in Stockholders’ Equity | ||||||||||||||
Other comprehensive income, net of tax | (341) | |||||||||||||
Other comprehensive income, net of tax | (341) | (341) | ||||||||||||
Net income | 18,219 | 18,219 | ||||||||||||
Ending balance at Dec. 31, 2018 | $ 2 | 68,498 | (563) | 28,355 | 96,292 | |||||||||
Ending balance (in shares) at Dec. 31, 2018 | 17,000,000 | |||||||||||||
Changes in Stockholders’ Equity | ||||||||||||||
Other comprehensive income, net of tax | 5,249 | |||||||||||||
Other comprehensive income, net of tax | 5,249 | 5,249 | ||||||||||||
Distribution to stockholder | (5,120) | (5,120) | ||||||||||||
Stock-based compensation | 24,103 | 24,103 | ||||||||||||
Issuance of common stock in stock offering, net of offering cost | 87,411 | 87,411 | ||||||||||||
Issuance of common stock (in shares) | 6,468,750 | |||||||||||||
Net income | 10,621 | 10,621 | ||||||||||||
Ending balance at Dec. 31, 2019 | $ 2 | 180,012 | 4,686 | $ (156) | 33,856 | $ (156) | $ 218,556 | |||||||
Ending balance (in shares) at Dec. 31, 2019 | 23,468,750 | 23,468,750 | ||||||||||||
Changes in Stockholders’ Equity | ||||||||||||||
Other comprehensive income, net of tax | $ 8,560 | |||||||||||||
Other comprehensive income, net of tax | 8,560 | 8,560 | ||||||||||||
Stock-based compensation | 2,167 | 2,167 | ||||||||||||
Issuance of common stock in stock offering, net of offering cost | $ 1 | $ 35,464 | $ 90,082 | $ 35,464 | $ 90,083 | |||||||||
Issuance of common stock (in shares) | 750,000 | 1,150,000 | ||||||||||||
Issuance of common stock via employee stock purchase plan | 741 | $ 741 | ||||||||||||
Issuance of common stock via employee stock purchase plan (in shares) | 28,367 | 28,367 | ||||||||||||
Issuance of common stock via equity incentive plan | 2,041 | $ 2,041 | ||||||||||||
Issuance of common stock via equity incentive plan (in shares) | 128,679 | |||||||||||||
Net income | 6,257 | 6,257 | ||||||||||||
Ending balance at Dec. 31, 2020 | $ 3 | $ 310,507 | $ 13,246 | $ 39,957 | $ 363,713 | |||||||||
Ending balance (in shares) at Dec. 31, 2020 | 25,525,796 | 25,525,796 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Operating activities | |||
Net income | $ 6,257 | $ 10,621 | $ 18,219 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Stock-based compensation expense | 2,167 | 24,103 | |
Depreciation and amortization expense | 1,336 | 216 | 212 |
Amortization and write-off of debt issuance costs | 921 | 443 | |
Loss on asset disposal | 1 | ||
Net realized and unrealized losses (gains) on investments | (1,488) | (4,443) | 2,569 |
Amortization of premium on fixed maturity securities | 1,214 | 431 | 481 |
Deferred income tax expense | 1,094 | 646 | |
Changes in operating assets and liabilities: | |||
Accrued investment income | (1,159) | (652) | 54 |
Premium receivable | (12,754) | (17,604) | (3,546) |
Deferred policy acquisition costs | (10,280) | (11,149) | 1,109 |
Reinsurance recoverables | (87,473) | (2,693) | 70 |
Ceded unearned premiums | (8,926) | (7,821) | (15,109) |
Prepaid expenses and other assets | (20,356) | (8,998) | (4,603) |
Accounts payable and other accrued liabilities | 5,998 | 3,287 | 2,748 |
Reserve for losses and loss adjustment expenses | 112,215 | 760 | (1,723) |
Unearned premiums | 53,116 | 51,243 | 17,154 |
Ceded premiums payable | 10,850 | 776 | 5,538 |
Funds held under reinsurance treaty | 2,857 | 938 | (797) |
Income taxes payable | (1,117) | 1,117 | (11) |
Net cash provided by operating activities | 53,551 | 41,700 | 22,808 |
Investing activities | |||
Purchases of property and equipment | (132) | (115) | (332) |
Purchases of fixed maturity securities | (295,002) | (211,587) | (102,745) |
Purchases of equity securities | (46,944) | (58,858) | (33,712) |
Sales and maturities of fixed maturity securities | 124,243 | 124,151 | 81,215 |
Sales of equity securities | 45,983 | 64,820 | 29,959 |
Securities receivable or payable, net | (2,523) | 1,023 | 250 |
Purchase of policy renewal rights | (7,068) | ||
Net cash used in investing activities | (181,443) | (80,566) | (25,365) |
Financing activities | |||
Proceeds from initial public offering, net of offering costs | 87,411 | ||
Repayment of surplus notes | (20,000) | (17,500) | |
Distribution to stockholder | (5,120) | ||
Proceeds from issuance of Floating Rate Notes, net of issuance costs | 19,049 | ||
Proceeds from common stock issued via employee stock purchase plan | 741 | ||
Proceeds from common stock issued via stock option exercises | 2,041 | ||
Net cash provided by financing activities | 128,329 | 62,291 | 1,549 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 437 | 23,425 | (1,008) |
Cash, cash equivalents and restricted cash at beginning of period | 33,349 | 9,924 | 10,932 |
Cash, cash equivalents and restricted cash at end of period | 33,786 | 33,349 | 9,924 |
Supplementary cash flow information: | |||
Cash paid for income taxes | 7,182 | 5,645 | 11 |
Cash paid for interest | $ 1,162 | $ 1,727 | |
Stock Issued in January | |||
Financing activities | |||
Proceeds from stock offering, net of offering costs | 35,464 | ||
Stock Issued in June | |||
Financing activities | |||
Proceeds from stock offering, net of offering costs | $ 90,083 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Cash and cash equivalents and restricted cash and cash equivalents | ||||
Cash and cash equivalents | $ 33,538 | $ 33,119 | ||
Restricted cash | 248 | 230 | ||
Cash and cash equivalents and restricted cash | $ 33,786 | $ 33,349 | $ 9,924 | $ 10,932 |
Summary of Operations and Basis
Summary of Operations and Basis of Presentation | 12 Months Ended |
Dec. 31, 2020 | |
Summary of Operations and Basis of Presentation | |
Summary of Operations and Basis of Presentation | 1. Summary of Operations and Basis of Presentation Summary of Operations Palomar Holdings, Inc. (“the Company”) is a Delaware incorporated insurance holding company that was founded in 2014. The Company has several wholly owned subsidiaries including an Oregon domiciled insurance company, Palomar Specialty Insurance Company (“PSIC”), a Bermuda based reinsurance company, Palomar Specialty Reinsurance Company Bermuda Ltd. (“PSRE”), an Arizona domiciled surplus lines insurance company, Palomar Excess and Surplus Insurance Company (“PESIC”), and a California domiciled property and casualty insurance agency, Palomar Insurance Agency, DBA Palomar General Insurance Agency (“PGIA”). PSIC is a property and casualty insurance company domiciled in the state of Oregon. The Company’s core focus is on the residential and commercial earthquake markets in earthquake‑exposed states such as California, Oregon, Washington, and states with exposure to the New Madrid Seismic Zone. The Company also offers products tailored to broader geographic regions and perils, including Hawaii residential hurricane, Specialty Homeowners, Inland Marine, and Flood products. PSIC is licensed to underwrite insurance on an admitted basis in 32 states in the United States, as of December 31, 2020, mainly through managing general insurance agencies, wholesale brokers, and independent agents. PSRE is a Bermuda captive reinsurance company that has historically been used to reinsure certain premiums on a quota share basis exclusively for PSIC. PESIC is an Arizona domiciled surplus lines insurance company. PESIC is licensed in Arizona to write surplus lines policies across all the Company’s lines of business and was formed and began writing policies in 2020. PGIA is a property and casualty general insurance agency for PSIC, PESIC, and unaffiliated insurance carriers. As a general insurance agency, PGIA assists in developing insurance products, underwriting insurance policies, and receiving and disbursing funds from premium and loss transactions under contracts on behalf of insurance companies. PGIA earns commissions from the product development, marketing, and servicing of the insurance companies’ programs. PGIA also earns fee income from policyholder transactions. The Company operates as an insurance holding company system and is subject to the insurance holding company laws of the States of Oregon and Arizona, the states in which PSIC and PESIC are domiciled. The Company is also commercially domiciled in California, making it subject to California insurance holding company laws. These statutes require that each insurance company in the system register with the insurance department of its state of domicile and furnish information concerning the operations of companies within the holding company system that may materially affect the operations, management or financial condition of the insurers within the system and domiciled in that state. The Company has a single operating segment, the property and casualty insurance business. While the Company’s chief operating decision‑maker reviews the revenue streams attributable to individual products, operations are managed, resources are allocated, and financial performance is evaluated on a consolidated basis. Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and include the accounts of the Company and its wholly‑owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Stock Split On March 15, 2019, the Company effected a 17,000,000 for one forward stock split in conjunction with domestication in the United States. All share and per share information included in the accompanying consolidated financial statements and notes to the consolidated financial statements have been retroactively adjusted to reflect the stock split for the Company’s common stock for all periods presented. Initial Public Offering (“IPO”) On April 22, 2019, the Company completed its IPO with the sale of 6,468,750 shares of common stock at a price to the public of $15.00 per share, including 843,750 shares sold upon the exercise in full of the underwriter’s option to purchase additional shares. After underwriter discounts and commissions and offering expenses, net proceeds from the IPO were approximately $87.4 million. 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 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 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. |
Significant Accounting Policies
Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2020 | |
Significant Accounting Policies | |
Significant Accounting Policies | 2. Significant Accounting Policies Cash and Cash Equivalents Cash and cash equivalents include time deposits and marketable securities with original maturities of three months or less at acquisition and are stated at cost, which approximates fair value. The Company maintains cash balances in federally insured financial institutions. Restricted Cash Restricted cash includes cash on deposit with reinsurance carriers. Restricted cash also includes cash held in a fiduciary capacity for the benefit of third-party insurance carriers. Investments All of the Company’s investments in fixed maturity securities are classified as available‑for‑sale and are carried at fair value. Investment income consists primarily of interest and dividends. Interest income is recognized on an accrual basis. Premiums and discounts on mortgage‑backed securities and asset‑backed securities are amortized or accrued using the prospective method which considers anticipated prepayments at the date of purchase. To the extent that the estimated lives of such securities change as a result of changes in estimated prepayment rates, the adjustments are included in net investment income using the prospective method. Dividend income is recognized on the ex‑dividend date. Net investment income represents investment income, net of expenses. Unrealized gains and losses related to fixed maturity securities are included in accumulated other comprehensive income as a separate component of stockholders’ equity. Equity securities are carried at fair value with unrealized gains and losses included as a component of net income on the Company’s consolidated statement of income and comprehensive income. The Company uses the specific‑identification method to determine the cost of fixed maturity securities sold and the first‑in, first‑out method for lots of equity securities sold. 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. Factors considered in the review include the extent to which the fair value has been less than amortized cost, and current market interest rates and whether the unrealized loss is credit‑driven or a result of changes in market interest rates. The Company also considers factors specific to the issuer including the general financial condition of the issuer, the issuers industry and future business prospects, any past failure of issuer to make scheduled interest or principal payments, and the payment structure of the investment and the issuers ability to make contractual payments on the investment. The Company also considers whether it intends to sell the security or if it is more likely than not that it will be required to sell the security before recovery of its amortized cost. When assessing whether it intends to sell a fixed-maturity security or if it is likely to be required to sell a fixed-maturity security before recovery of its amortized cost, the Company evaluates facts and circumstances including, but not limited to, decisions to reposition the investment portfolio, potential sales of investments to meet cash flow needs, and potential sales of investments to capitalize on favorable pricing. For fixed-maturity securities where a decline in fair value is below the amortized cost basis and the Company intends to sell the security, or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost, a credit-loss charge is recognized in net income based on the fair value of the security at the time of assessment. For fixed-maturity securities that the Company has the intent and ability to hold, the Company compares the estimated present value of the cash flows expected to be collected to the amortized cost of the security. The extent to which the estimated present value of the cash flows expected to be collected is less than the amortized cost of the security represents the credit-related portion of the impairment, which is recognized in net income through an allowance for credit losses. Any remaining decline in fair value represents the noncredit portion of the impairment, which is recognized in other comprehensive income. The Company reports accrued interest receivable as a component of accrued investment income on its consolidated balance sheet which is presented separately from available-for-sale securities. The Company does not measure an allowance for credit losses on accrued interest receivable and instead would write off accrued interest receivable at the time an issuer defaults or is expected to default on payments. Prior to the adoption of ASU 2016-13, the Company evaluated fixed maturity securities for credit losses and any losses were bifurcated into the credit‑related loss and the loss related to all other factors. The credit‑related impairment loss would have been recognized as a realized loss in the statement of income and comprehensive income and the cost basis of the security would have been reduced. The impairment related to other factors would have remained in accumulated other comprehensive income. The Company did not recognize any credit losses during the years ended December 31, 2020 and 2019 related to its available-for-sale securities. Fair Value 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 valuation 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 fair value of the Company’s investments in equity securities is based on quoted prices available in active markets and classified and disclosed in Level 1 of the hierarchy. Concentration of Credit Risk Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, fixed maturity securities and reinsurance recoverables. The Company places its cash and cash equivalents with high credit quality financial institutions and its fixed maturity securities in securities of the U.S. government, U.S. government agencies, and high credit quality issuers of debt securities. The Company evaluates the financial condition of its reinsurers and reinsures its business with highly rated reinsurers and sometimes requires letters of credit or retains funds from reinsurers (see Note 10). Premiums Receivable Premiums receivable represent amounts due from policyholders, insurance agents, or program administrators for policies written. Generally, premiums are collected prior to providing risk coverage, minimizing the Company’s exposure to credit risk. Premiums receivable are short-term in nature and due within a year. The Company has established an allowance for uncollectable premiums related to its credit risk, which it reviews on a quarterly basis and adjusts as appropriate. The company considers the current economic environment, specific regulatory developments, and historic payment and cancelation trends by line of business and location when determining whether to record an allowance for uncollectable premiums. Prior to December 31, 2019, the Company did not have an allowance for uncollectable premiums. An initial allowance for uncollectable premiums of $0.2 million was established upon adoption of ASC 2016-13 on January 1, 2020 and the company recognized an immaterial amount of credit losses relating to uncollectable premiums during the year ended December 31, 2020. Deferred Policy Acquisition Costs The costs of successfully acquiring new business, principally commission expense and premium taxes, are deferred and amortized over the terms of the policies in force, net of any ceding commissions. Premiums Earned Gross premiums written are recorded at policy inception and are earned as revenue ratably over the term of the respective policies. Premiums written not yet recognized as revenue are reflected as unearned premiums on the balance sheet, or as advanced premiums if received prior to the policy effective date. Premiums written where cash is not yet received are recognized as premiums receivable. A premium deficiency is recognized if the sum of expected losses and loss adjustment expenses, unamortized acquisition costs, and policy maintenance costs exceeds the remaining unearned premiums. A premium deficiency would first be recognized by charging any unamortized acquisition costs to expense to the extent required to eliminate the deficiency. If the premium deficiency were greater than unamortized acquisition costs, a liability would be accrued for the excess deficiency. The Company does not consider anticipated investment income when determining if a premium deficiency exists. There was no premium deficiency at December 31, 2020 or 2019. Commission and Other Income Commission and other income is comprised of commissions earned on policies where the Company has no exposure to underlying risk and fees earned in conjunction with underwriting policies. Commission and fee income is earned at the time the policy is written. Property and Equipment Property and equipment are capitalized and carried at cost less accumulated depreciation. Depreciation for property and equipment is calculated on a straight‑line basis using useful lives of 3 to 5 years. Leasehold improvements and other fixed assets are capitalized and depreciated over the useful lives of the properties and equipment. Expenditures for maintenance and repairs are charged to operations as incurred. Upon disposition, the asset cost and related depreciation are removed from the accounts and the resulting gain or loss is included in the Company’s results of operations. Capitalized Software Costs associated with the implementation of certain internal systems are capitalized and carried at capitalized cost less accumulated amortization and are included as a component of prepaid expenses and other assets on the Company’s consolidated balance sheet. Costs capitalized include internal personnel costs, external developer costs, and interest. The implementation costs relate to systems built on software which the Company purchases under a cloud computing arrangement and accounts for as a service contract. As such, capitalized costs are amortized over the term of the service contract, which currently ends in December 2024. Intangible Assets Intangible assets consist of both finite and indefinite lived assets. Finite lived intangible assets consist of customer relationships acquired from another insurer during 2020. Indefinite lived intangible assets consist of state licenses acquired upon formation of the Company. Intangible assets are initially recognized and measured at fair value and are subsequently evaluated for impairment annually or more frequently if circumstances warrant it. No impairments of intangible assets were recognized for the years ended December 31, 2020, 2019 or 2018. Impairment of Long‑Lived Assets Long‑lived assets with finite lives are tested for impairment whenever recognized events or changes in circumstances indicate the carrying value of these assets may not be recoverable. If indicators of impairment are present, the fair value is calculated using estimated future cash flows expected to be generated from the use of those assets. An impairment loss is recognized only if the carrying amount of a long‑lived asset or asset group is not recoverable and exceeds its fair value. The carrying amount of a long‑lived asset or asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset or asset group. This assessment is based on the carrying amount of the asset or asset group at the date it is tested for recoverability. An impairment loss is measured as the amount by which the carrying amount of a long‑lived asset or asset group exceeds its fair value. No impairments of long‑lived assets were recognized for the years ended December 31, 2020, 2019 and 2018. Reserve for Losses and Loss Adjustment Expenses The reserve for unpaid losses and loss adjustment expenses includes estimates for unpaid claims and claim adjustment expenses on reported losses and estimates of losses incurred but not reported (“IBNR”), net of salvage and subrogation recoveries. The liability is based on individual claims, case reserves and other estimates reported by policyholders, as well as management estimates of ultimate losses and loss adjustment expenses. Inherent in the estimates of ultimate losses and loss adjustment expenses are expected trends in claims severity and frequency and other factors that could vary significantly as claims are settled. The Company’s estimates of ultimate losses and loss adjustment expenses are based in part upon the estimation of claims resulting from natural disasters such as hurricanes and earthquakes. Estimation by management of the ultimate losses and loss adjustment expenses resulting from catastrophic events is inherently difficult because of the potential severity of property catastrophe claims. Therefore, the Company uses both proprietary and commercially available models, as well as historic claims experience, for purposes of providing an estimate of ultimate losses and loss adjustment expenses. Reserves for IBNR are established in accordance with industry practice to provide for (i) the estimated amount of future loss payments on incurred claims not yet reported, and (ii) potential development on reported claims. IBNR reserves are estimated based on generally accepted actuarial reserving techniques that consider quantitative loss experience data and, where appropriate, qualitative factors. Ultimate losses and loss adjustment expenses may vary materially from the amounts provided in the consolidated financial statements. Estimates of unpaid losses and loss adjustment expenses are reviewed regularly and, as experience develops and new information becomes known, the liabilities are adjusted as necessary. Such adjustments, if any, are reflected in operations in the period in which they become known and are accounted for as changes in estimates. The Company does not discount its liability for unpaid losses and loss adjustment expenses. The Company does not write insurance policies covering toxic clean‑up, asbestos‑related illness or other environmental remediation exposures. Reinsurance The Company purchases excess of loss and quota share reinsurance to protect it against the impact of losses. Reinsurance premiums, commissions, ceded unearned premiums are accounted for on bases consistent with the underlying terms of the reinsurance contracts and in proportion to the amount of insurance protection provided. The Company receives ceding commissions in connection with quota share reinsurance. The ceding commissions are capitalized and amortized as a reduction of acquisition expenses. Amounts applicable to ceded unearned premiums are reported as assets in the accompanying consolidated balance sheets. Premiums earned and losses and loss adjustment expenses incurred are stated in the accompanying consolidated statements of income and comprehensive income net of amounts ceded to reinsurers. Reinsurance recoverables represent balances due to the Company from its reinsurers for paid and unpaid losses and loss adjustment expenses. The Company is exposed to credit losses from reinsurers being unable to meet their obligations. The Company evaluates the financial condition of potential reinsurers and reinsures its business only with highly rated reinsurers with a rating of “A-“ (Excellent) (Outlook Stable) or better from A.M. Best. Reinsurers who do not meet the Company’s rating criteria are required to post collateral. The Company reviews credit quality of its reinsurers on a quarterly basis. The Company’s reinsurance contracts also include special termination provisions that allow the Company to cancel and replace any participating reinsurer that is downgraded below a rating of “A−” from A.M. Best, or whose surplus drops by more than 20%. Historically, the Company has not experienced any credit losses from reinsurance recoverables and did not have an allowance for uncollectable reinsurance recoverables as of December 31, 2020 or December 31, 2019. Stock Based Compensation Expense Stock-based compensation expense is recognized on a straight-line basis over the vesting period of awards. The Company does not apply a forfeiture rate to unvested awards and accounts for forfeitures as they occur. For stock option grants, the fair value of awards is estimated using the Black Scholes Model. The fair value of restricted stock units is determined using the closing price of the Company's common stock on the grant date. All stock-based compensation is included in other underwriting expenses in the Company’s consolidated statements of income and comprehensive income. Income Taxes The Company is taxed as a property/casualty insurer for federal income tax purposes. Deferred income tax assets and liabilities are determined based on the difference between the financial statement and the tax bases of assets and liabilities, using enacted tax rates expected to be in effect during the year in which the basis differences reverse. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company recognizes the tax benefit of uncertain tax positions where the position is more likely than not to be sustained assuming examination by taxing authorities. Based on its evaluation for the tax years ended December 31, 2020 and 2019, the Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements. The Company recognizes interest and penalties related to uncertain tax positions, if any, as a component of income tax expense. The Company has not been assessed interest or penalties by any major tax jurisdictions for the respective tax years ended December 31, 2020, 2019, and 2018. Earnings Per Share Basic earnings per share is calculated by dividing net income by the weighted‑average common shares outstanding for the period. Diluted earnings per share reflects the dilution which could occur if equity-based awards are converted into common share equivalents as calculated using the treasury stock method. When inclusion of additional common share equivalents increases the earnings per share or reduces the loss per share, the effect on earnings per share is anti-dilutive, and the diluted net earnings or net loss per share is computed excluding these common share equivalents. Recently adopted accounting pronouncements Clarification on change in filing status and prior quarterly information Prior to December 31, 2020, the Company qualified as an emerging growth company (“EGC”) under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. The Company was previously electing to adopt new or revised accounting guidance within the same time periods as private companies as permitted by its status as an EGC. The Company became a large accelerated filed on December 31, 2020 and must now adopt new accounting guidance within the same time periods as public companies, beginning with this 2020 Annual Report on Form 10-K. Prior to this annual report, the Company’s 2020 quarterly filings did not reflect adoption of the below guidance as the Company was not required to have adopted it. Upon adoption of the below guidance, the Company updated its financials as if the below guidance was adopted on January 1, 2020, however, this adoption had a negligible impact on previously filed quarterly information. Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance for accounting for leases, ASU 2016‑02, Leases (Topic 842) and subsequently issued multiple clarifying updates to the guidance. This updated guidance requires the recognition of a right‑of‑use (“ROU”) asset and a corresponding lease liability, discounted to the present value, for all leases that extend beyond 12 months. Under the previous guidance, leases were only included on the balance sheet if the criteria to classify the agreement as a capital lease were met. The Company adopted this new guidance as of January 1, 2020. The Company adopted this guidance using the modified retrospective transition method, applying the transition provisions on the date of adoption and not restating prior periods. The Company elected to use a number of practical expedients permitted under the transition guidance, but did not elect to use hindsight in determining the lease term. Upon adoption, the Company recognized a ROU asset of $2.9 million and lease liabilities of $3.8 million, with the difference representing the reclassification of deferred rent and lease incentive liabilities (the difference between the straight-line rent expenses and cash paid for rent under the leases) to operating lease ROU assets from other liabilities. The ROU asset and corresponding liability recognized pertained to various operating leases for office space. The Company did not have any cumulative-effect adjustment because of the adoption. Measurement of credit losses In June 2016, the FASB issued ASU 2016‑13, Financial Instruments-Credit Losses (Topic 326) and subsequently issued multiple clarifying updates to the guidance. This updated guidance requires financial assets measured at amortized cost to be presented at the net amount expected to be collected by means of an allowance for credit losses that is included in net income. Credit losses relating to available-for-sale debt securities are also required to be recorded through a reversible allowance for credit losses, but the allowance is limited to the amount by which fair value is less than amortized cost. The previous accounting guidance delayed the recognition of credit losses until it was probable a loss had been incurred. The Company adopted this guidance on January 1, 2020 using the modified retrospective approach and recorded a $0.2 million cumulative effect adjustment to beginning retained earnings upon adoption relating to an allowance for credit losses on the Company’s premium receivables. The adoption of this accounting guidance did not have an impact on value of the Company’s fixed maturity securities or its reinsurance recoverables. Recently issued accounting pronouncements not yet adopted Income Taxes In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes. Among other things, ASU 2019-12 eliminates certain exceptions for recognizing deferred taxes for investments, performing intra-period tax allocation and calculating income taxes in interim periods. ASU 2019-12 also clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company will adopt this guidance in the first fiscal quarter of 2021 and does not expect adoption to have a material impact on its consolidated financial statements. |
Investments
Investments | 12 Months Ended |
Dec. 31, 2020 | |
Investments | |
Investments | 3. Investments The Company’s available‑for‑sale investments are summarized as follows: Gross Gross Amortized Unrealized Unrealized Fair December 31, 2020 Cost or Cost Gains Losses Value (in thousands) Fixed maturities: U.S. Governments $ 16,308 $ 756 $ (5) $ 17,059 States, territories, and possessions 6,208 428 — 6,636 Political subdivisions 2,027 125 — 2,152 Special revenue excluding mortgage/asset-backed securities 39,704 1,525 (2) 41,227 Industrial and miscellaneous 234,049 11,602 (291) 245,360 Mortgage/asset-backed securities 82,983 2,785 (215) 85,553 Total available-for-sale investments $ 381,279 $ 17,221 $ (513) $ 397,987 Gross Gross Amortized Unrealized Unrealized Fair December 31, 2019 Cost or Cost Gains Losses Value (in thousands) Fixed maturities: U.S. Governments $ 13,371 $ 321 $ (13) $ 13,679 States, territories, and possessions 2,298 147 — 2,445 Political subdivisions 1,913 29 — 1,942 Special revenue excluding mortgage/asset-backed securities 18,139 343 (46) 18,436 Industrial and miscellaneous 124,726 4,326 (39) 129,013 Mortgage/asset-backed securities 50,831 824 (19) 51,636 Total available-for-sale investments $ 211,278 $ 5,990 $ (117) $ 217,151 Security holdings in an unrealized loss position As of December 31, 2020, the Company held 90 fixed maturity securities in an unrealized loss position with a total estimated fair value of $41.5 million and total gross unrealized losses of $0.5 million. None of the fixed maturity securities with unrealized losses has ever missed, or been delinquent on, a scheduled principal or interest payment. As of December 31, 2019, the Company held 51 fixed maturity securities in an unrealized loss position with a total estimated fair value of $20.9 million and total gross unrealized losses of $0.1 million. None of the fixed maturity securities with unrealized losses has ever missed, or been delinquent on, a scheduled principal or interest payment. 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 December 31, 2020 and 2019, are as follows: Less Than 12 Months More Than 12 Months Total Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2020 Value Losses Value Losses Value Losses (in thousands) Fixed maturity securities: U.S. Governments $ 1,496 $ (5) $ — $ — $ 1,496 $ (5) States, territories, and possessions — — — — — — Political subdivisions — — — — — — Special revenue excluding mortgage/asset-backed securities 520 (2) — — 520 (2) Industrial and miscellaneous 22,718 (234) 203 (57) 22,921 (291) Mortgage/asset-backed securities 16,092 (211) 496 (4) 16,588 (215) Total $ 40,826 $ (452) $ 699 $ (61) $ 41,525 $ (513) Less Than 12 Months More Than 12 Months Total Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2019 Value Losses Value Losses Value Losses (in thousands) Fixed maturity securities: U.S. Governments $ 1,235 $ (11) $ 1,827 $ (2) $ 3,062 $ (13) States, territories, and possessions — — — — — — Political subdivisions — — — — — — Special revenue excluding mortgage/asset-backed securities 3,548 (46) — — 3,548 (46) Industrial and miscellaneous 6,929 (38) 188 (1) 7,117 (39) Mortgage/asset-backed securities 7,035 (19) 182 — 7,217 (19) Total $ 18,747 $ (114) $ 2,197 $ (3) $ 20,944 $ (117) The Company reviewed the above securities at each balance sheet date to consider whether it was necessary to recognize a credit loss or other-than-temporary impairment (OTTI) related to any of these securities. Based on the reviews, 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 for both periods. The Company does not intend to sell the investments and it is not more likely than not that that the Company will be required to sell the investments before the recovery of their amortized cost basis. Therefore, the Company did not recognize an allowance for credit losses related to any of these securities for the year ended December 31, 2020 and did not recognize any OTTI charges for the year ended December 31, 2019. Contractual maturities of available‑for‑sale fixed maturity securities The amortized cost and fair value of fixed maturity securities at December 31, 2020, by contractual maturity, are shown below. Amortized Fair Cost Value (in thousands) Due within one year $ 11,222 $ 11,351 Due after one year through five years 146,302 151,123 Due after five years through ten years 99,194 106,600 Due after ten years 41,578 43,360 Mortgage and asset-backed securities 82,983 85,553 $ 381,279 $ 397,987 Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations. Change in unrealized gains (losses) of investments The following table presents the change in available‑for‑sale gross unrealized gains or losses by investment type: Year Ended December 31, 2020 2019 2018 (in thousands) Change in net unrealized gains (losses) Fixed maturities $ 10,835 $ 6,602 $ (341) Net increase (decrease) $ 10,835 $ 6,602 $ (341) Net investment income summary Net investment income is summarized as follows: December 31, 2020 2019 2018 (in thousands) Interest income $ 8,554 $ 5,894 $ 3,036 Dividend income 489 424 514 Investment management fees and expenses (431) (343) (312) Net investment income $ 8,612 $ 5,975 $ 3,238 Net realized and unrealized investment gains and losses The following table presents net realized and unrealized investment gains and losses: Year Ended December 31, 2020 2019 2018 (in thousands) Realized gains: Gains on sales of fixed maturity securities $ 501 $ 1,405 $ 19 Gains on sales of equity securities 62 177 4,287 Total realized gains 563 1,582 4,306 Realized losses: Losses on sales of fixed maturity securities (46) (84) (418) Losses on sales of equity securities (68) (64) (421) Total realized losses (114) (148) (839) Net realized investment gains 449 1,434 3,467 Net unrealized gains (losses) on equity securities 1,039 3,009 (6,036) Net realized and unrealized gains (losses) on investments $ 1,488 $ 4,443 $ (2,569) Proceeds from the sale of fixed maturity securities were $39.8 million, $46.3 million and $48.5 million for the years ended December 31, 2020, 2019 and 2018, 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 consolidated balance sheets. At December 31, 2020 and 2019, the carrying value of securities on deposit with state regulatory authorities was $7.5 million and $5.1 million, respectively. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2020 | |
Fair Value Measurements | |
Fair value measurements | 4. Fair value measurements The following tables present the Company’s fair value hierarchy for financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2020 and 2019: December 31, 2020 Level 1 Level 2 Level 3 Total (in thousands) Assets: Fixed maturity securities U.S. Governments $ — $ 17,059 $ — $ 17,059 States, territories, and possessions — 6,636 — 6,636 Political subdivisions — 2,152 — 2,152 Special revenue excluding mortgage/asset-backed securities — 41,227 — 41,227 Industrial and miscellaneous — 245,360 — 245,360 Mortgage/asset-backed securities — 85,553 — 85,553 Equity securities 24,322 — — 24,322 Cash, cash equivalents, and restricted cash 33,786 — — 33,786 Total assets $ 58,108 $ 397,987 $ — $ 456,095 December 31, 2019 Level 1 Level 2 Level 3 Total (in thousands) Assets: Fixed maturity securities U.S. Governments $ — $ 13,679 $ — $ 13,679 States, territories, and possessions — 2,445 — 2,445 Political subdivisions — 1,942 — 1,942 Special revenue excluding mortgage/asset-backed securities — 18,436 — 18,436 Industrial and miscellaneous — 129,013 — 129,013 Mortgage/asset-backed securities — 50,136 1,500 51,636 Equity securities 22,328 — — 22,328 Cash, cash equivalents, and restricted cash 28,350 4,999 — 33,349 Total assets $ 50,678 $ 220,650 $ 1,500 $ 272,828 The carrying amounts of financial assets and liabilities reported in the accompanying consolidated balance sheets including cash and cash equivalents, restricted cash, receivables, reinsurance recoverable, and accounts payable and other accrued liabilities approximate fair value due to their short term‑maturity. Transfers between Level 3 and Level 2 securities result from changes in the availability of market observable inputs and are recorded at the beginning of the reporting period. As of December 31, 2019, the Company had $1.5 million of fixed income securities classified as Level 3 due to the availability of market observable inputs. These securities were transferred to Level 2 during the year ended December 31, 2020. |
Policy Acquisition Costs
Policy Acquisition Costs | 12 Months Ended |
Dec. 31, 2020 | |
Policy Acquisition Costs | |
Policy Acquisition Costs | 5. Policy Acquisition Costs The following tables present the policy acquisition costs deferred and amortized over the terms of the policies in force: December 31, 2020 2019 2018 (in thousands) Deferred Policy Acquisition Costs: Balance, beginning of year $ 25,201 $ 14,052 $ 15,161 Additions to deferred balance: Direct commissions 82,786 59,676 36,934 Ceding commissions (19,371) (17,257) (15,218) Premium taxes 7,024 5,236 3,362 Total net additions 70,439 47,655 25,078 Amortization of net policy acquisition costs (60,159) (36,506) (26,187) Balance, end of year $ 35,481 $ 25,201 $ 14,052 Acquisition expenses: Amortization of net policy acquisition costs $ 60,159 $ 36,506 $ 26,187 Period costs 3,882 753 2,037 Total Acquisition expenses $ 64,041 $ 37,259 $ 28,224 |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2020 | |
Intangible Assets | |
Intangible Assets | 6. Intangible Assets Intangible assets consist of the following: December 31, 2020 2019 (in thousands) Indefinite-lived intangibles: State insurance licenses $ 744 $ 744 Finite-lived intangibles: Customer relationships 10,768 — Accumulated amortization on finite-lived intangibles — — Total intangible assets $ 11,512 $ 744 State insurance licenses consist of licenses acquired at the inception of PSIC. Customer relationships represents the fair value of policy renewal rights acquired by PSIC from another insurance company in November 2020. The policy renewals pertaining to this intangible asset will begin in early 2021 and the Company intends to amortize this customer relationship intangible over a period of 8 years. |
Capitalized Assets
Capitalized Assets | 12 Months Ended |
Dec. 31, 2020 | |
Capitalized Assets | |
Capitalized Assets | 7. Capitalized Assets Capitalized software balances are as follows: Accumulated Net December 31, 2020 Cost Amortization Book Value (in thousands) Capitalized Software $ 8,450 $ (1,767) $ 6,683 Accumulated Net December 31, 2019 Cost Amortization Book Value (in thousands) Capitalized Software $ 4,567 $ (669) $ 3,898 Amortization expense relating to capitalized software for the years ended December 31, 2020, 2019 and 2018 was $1.1 million, $0.6 million and $0.03 million, respectively. Property and Equipment consists of the following: Accumulated Net December 31, 2020 Cost Depreciation Book Value (in thousands) Leasehold improvements $ 879 $ (459) $ 420 Computer hardware 276 (100) 176 Office equipment and furniture 519 (376) 143 Total $ 1,674 $ (935) $ 739 Accumulated Net December 31, 2019 Cost Depreciation Book Value (in thousands) Leasehold improvements $ 879 $ (342) $ 537 Computer hardware 144 (64) 80 Office equipment and furniture 519 (291) 228 Total $ 1,542 $ (697) $ 845 Depreciation expense for the years ended December 31, 2020, 2019 and 2018 was $0.2 million, $0.2 million, and $0.2 million respectively. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2020 | |
Leases | |
Leases | 8. Leases The Company has operating leases for office space used to conduct its insurance operations and administration activities. Operating lease ROU assets are a component of prepaid expenses and other assets and operating lease liabilities are included in accounts payable and other accrued liabilities in the Company's consolidated balance sheets. The Company determines whether an arrangement is a lease at its inception. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. To determine the present value of lease payments, the Company uses its incremental borrowing rate, which it calculates based on information available at the lease commencement date. For certain leases that contain options to extend, the options are included in lease liabilities only if the company is reasonably certain the option will be exercised. Variable lease costs such as parking are expensed in the period the obligation is incurred and are not included in the Company’s operating lease liability. The Company's lease agreements do not contain any residual value guarantees. Operating lease costs for the years ended December 31, 2020, 2019 and 2018 were $0.7 million, $0.6 million and $0.6 million, respectively. Operating lease costs are comprised of rental expense for operating leases. Lease expense is recognized on a straight-line basis over the lease term and is included as a component of other underwriting expenses in the Company’s consolidated statements of income and comprehensive income. The following tables provide supplementary information about the Company’s leases: Year ended December 31, 2020 (in thousands) Operating cash outflows from operating leases $ 842 Right of use assets obtained in exchange for new operating lease liabilities — December 31, 2020 ($ in thousands) Operating lease ROU assets $ 2,274 Operating lease liabilities $ 3,012 Weighted-average remaining lease term-operating leases years Weighted-average discount rate-operating leases % Future minimum lease payments as of December 31, 2020 are as follows: Years ending December 31, (in thousands) 2021 $ 2022 2023 2024 2025 — Total future minimum lease payments $ 3,123 Less: imputed interest (111) Total operating lease liability $ 3,012 |
Reserve for Losses and Loss Adj
Reserve for Losses and Loss Adjustment Expenses | 12 Months Ended |
Dec. 31, 2020 | |
Reserve for Losses and Loss Adjustment Expenses | |
Reserve for Losses and Loss Adjustment Expenses | 9 . Reserve for Losses and Loss Adjustment Expenses Loss and loss adjustment expenses reserves represent management’s best estimate of the ultimate cost of all reported and unreported losses incurred for the years ended December 31, 2020, 2019, and 2018. The Company does not discount loss and loss adjustment expense reserves. The reserves for unpaid losses and loss adjustment expenses are estimated using individual case‑basis valuations and statistical analyses. Those estimates are subject to the effects of trends in loss severity and frequency. In addition to case reserves, which are generally based on reported claims, the Company establishes reserves for incurred but not reported claims (“IBNR”). IBNR reserves are developed to provide for (i) the estimated amount of future loss payments on incurred claims not yet reported, and (ii) potential development on reported claims. IBNR reserves are estimated based on generally accepted actuarial reserving techniques that consider quantitative loss experience data and, where appropriate, qualitative factors. With the assistance of an independent, actuarial firm, the Company uses statistical analysis to estimate the cost of losses and loss adjustment expenses related to IBNR. Those estimates are based on historical information, industry information and practices, and estimates of trends that may affect the ultimate frequency of incurred but not reported claims and changes in ultimate claims severity. The Company regularly reviews its reserve estimates and adjusts them as necessary as experience develops or as new information becomes known. Such adjustments are included in current operations. During the loss settlement period, if there are indications that claims frequency or severity exceeds initial expectations, the Company generally increases its reserves for losses and loss adjustment expenses. Conversely, when claims frequency and severity trends are more favorable than initially anticipated, the Company generally reduces its reserves for losses and loss adjustment expenses once it has sufficient data to confirm the validity of the favorable trends. Even after such adjustments, the ultimate liability may exceed or be less than the revised estimates. Accordingly, the ultimate settlement of losses and the related loss adjustment expenses may vary significantly from the estimate included in the Company’s consolidated financial statements. Although considerable variability is inherent in such estimates, management believes the reserves for losses and loss adjustment expenses are adequate. The estimates are continually reviewed and adjusted as necessary as experience develops or new information becomes known. Any adjustments to estimates are recorded in the current period. The following table provides a reconciliation of the beginning and ending reserve balances for losses and LAE on a net of reinsurance basis to the gross amounts reported in the accompanying consolidated balance sheets: Year Ended December 31, 2020 2019 2018 (in thousands) Reserve for losses and loss adjustment expenses net of reinsurance recoverables at beginning of period $ 3,869 $ 4,165 $ 4,432 Add: Incurred losses and loss adjustment expenses, net of reinsurance, related to: Current year 64,179 5,774 8,165 Prior years (64) (181) (1,891) Total incurred 64,115 5,593 6,274 Deduct: Loss and loss adjustment expense payments, net of reinsurance, related to: Current year 31,879 2,179 4,409 Prior years 1,635 3,710 2,132 Total payments 33,514 5,889 6,541 Reserve for losses and loss adjustment expense net of reinsurance recoverables at end of period 34,470 3,869 4,165 Add: Reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period 94,566 12,952 11,896 Reserve for losses and loss adjustment expenses gross of reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period $ 129,036 $ 16,821 $ 16,061 The foregoing reconciliation shows loss and loss adjustment expense reserve redundancies of $0.1 million, $0.2 million, and $1.9 million developed in 2020, 2019 and 2018, respectively. During 2020, this favorable reserve development related to lower than anticipated frequency and severity of claims in our homeowners and special property lines of business offset by higher than anticipated frequency and severity of claims in our assumed reinsurance line. During 2019, this favorable reserve development was primarily related to lower than originally anticipated frequency and severity of claims in our homeowners lines of business, offset by higher than originally anticipated frequency and severity of claims in our special property lines of business. During 2018, this favorable reserve development was primarily due to favorable development in our homeowners lines of business due to lower than originally anticipated frequency and severity of claims. The Company compiles and aggregates its claims data by grouping the claims according to the year in which the claim occurred (“Accident Year”) when analyzing claim payment and emergence patterns and trends over time. For the purpose of defining claims frequency, the number of reported claims is by loss occurrence and includes claims that do not result in a liability or payment associated with them. The Company analyzed the usefulness of disaggregation of its results and determined the characteristics associated with the policies and the related unpaid loss reserves, incurred losses, and payment patterns are similar in nature. The Company separates its special property and other claim experience from its homeowner claim experience when analyzing losses and allocated loss adjustment expenses incurred and paid development and claim count triangles, as there are distinct differences in the development and claim count emergence patterns as well as methods of IBNR projection. The Special Property classification includes fire, allied lines, inland marine, and earthquake claims. As such, the following tables show the Company’s historical homeowner and special property incurred and cumulative paid losses and LAE development, net of reinsurance, as well as IBNR loss reserves and the number of reported claims on an aggregate basis as of December 31, 2020 for each of the previous two accident years. The information provided herein about incurred and paid accident year claims development for the years ended December 31, 2018 and prior is presented as unaudited supplementary information. Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance Homeowners’ Insurance (in thousands) As of December 31, 2020 Incurred but Cumulative Year Ended December 31, Not Reported Number of Accident Year 2015(1) 2016(1) 2017(1) 2018(1) 2019 2020 Liabilities Claims 2015 $ 2,048 $ 1,785 $ 1,658 $ 1,636 $ 1,642 $ 1,636 $ — 381 2016 6,069 5,878 5,721 5,636 5,622 — 1,083 2017 9,354 7,418 6,630 6,388 3 2,973 2018 2,193 2,008 1,930 3 789 2019 914 838 98 1,178 2020 19,100 2,995 3,223 Total $ 35,514 $ 3,099 9,627 Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance Homeowners’ Insurance (in thousands) Year Ended December 31, Accident Year 2015(1) 2016(1) 2017(1) 2018(1) 2019 2020 2015 $ 860 $ 1,379 $ 1,523 $ 1,615 $ 1,634 $ 1,636 2016 4,120 5,356 5,585 5,607 5,619 2017 7,135 7,375 6,628 6,371 2018 1,550 1,853 1,922 2019 546 685 2020 13,588 Total $ 29,821 Reserve for losses and loss adjustment expense, net of reinsurance $ 5,693 (1) Data presented for these calendar years is required supplementary information, which is unaudited. Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance Homeowners’ Insurance (unaudited) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Payout percentage 75.69 % 17.95 % 1.19 % 0.66 % 0.69 % 0.12 % Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance Special Property Insurance (in thousands) As of December 31, 2020 Incurred but Cumulative Year Ended December 31, Not Reported Number of Accident Year 2015(1) 2016(1) 2017(1) 2018(1) 2019 2020 Liabilities Claims 2015 $ 630 $ 719 $ 671 $ 671 $ 678 $ 677 $ — 381 2016 1,381 1,249 1,251 1,454 1,453 — 1,103 2017 3,071 3,475 4,014 4,264 — 3,068 2018 5,970 6,095 6,009 — 949 2019 3,661 3,385 332 1,339 2020 42,334 9,554 1,240 Total $ 58,122 $ 9,886 8,080 Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance Special Property Insurance (in thousands) Year Ended December 31, Accident Year 2015(1) 2016(1) 2017(1) 2018(1) 2019 2020 2015 $ 265 $ 438 $ 586 $ 626 $ 666 $ 673 2016 703 1,064 1,216 1,444 1,453 2017 1,967 3,344 4,011 4,269 2018 2,859 6,036 6,009 2019 1,633 2,825 2020 18,274 Total 33,503 Reserve for losses and loss adjustment expense, net of reinsurance 24,619 (1) Data presented for these calendar years is required supplementary information, which is unaudited. Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance Special Property Insurance (unaudited) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Payout percentage 45.44 % 34.16 % 11.88 % 9.22 % 3.26 % 1.03 % The reconciliation of the net incurred and paid claims development tables to the liability for claims and claim adjustment expenses in the consolidated balance sheets is as follows: 2020 (in thousands) Net outstanding liabilities: Homeowners’ insurance $ 5,693 Special property 24,619 Reinsurance- Nonproportional assumed property(1) 4,110 Other 48 Reserve for losses and loss adjustment expense, net of reinsurance 34,470 Reinsurance recoverable on unpaid claims: Homeowners’ insurance $ 14,640 Special property 79,825 Other 101 Total reinsurance recoverable on unpaid claims 94,566 Total reserve for losses and loss adjustment expenses $ 129,036 (1) Reflects the Company’s share of Loss and Loss Adjustment Expense related to non-proportional assumed reinsurance business. This amount reflects gross and net reserves related to this treaty and the ultimate incurred amount reflects IBNR only. The Company does not have direct access to individual claim information underlying the assumed quota arrangement. The Company does not use claim frequency information in the determination of loss reserves or for other internal purposes. Based on these considerations, the Company does not believe providing claims frequency information is practicable as it relates to this line of business . |
Reinsurance
Reinsurance | 12 Months Ended |
Dec. 31, 2020 | |
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. In an XOL treaty, the Company retains losses for any occurrence up to a specified amount (its “retention”) and reinsurers assume any losses above that amount. Historically, the Company has had a retention of between $5 million and $15 million for hurricane and earthquake events. As of December 31, 2020, the Company’s catastrophe event retention is $10 million for all perils and $1 million as a vertical co-participation in selected layers. As of December 31, 2020, the Company’s XOL reinsurance structure provides protection up to $1.4 billion for earthquake events and $600 million for hurricane events. In a quota share agreement, the Company transfers, or cedes, part or all of its exposure to a reinsurer who receives a portion of the associated premium in exchange. The reinsurer also must share an agreed upon portion of losses and agreed upon portion of the associated commission expense. The Company has quota share reinsurance agreements on several of its lines with the Commercial All Risk and Specialty Homeowners lines currently accounting for the largest amount of ceded written premiums. For Texas Homeowners, a component of Specialty Homeowners, the Company ceded substantially all exposure between June 2018 and June 2019 and ceded a significant portion of exposure thereafter. Ceded written premium related to the Texas Homeowners line was $14.6 million, $20.4 million and $24.9 million for the years ended December 31, 2020, 2019 and 2018, respectively. Ceded written premium related to the Commercial All Risk line was $19.2 million, $19.0 million and $7.2 million for the years ended December 31, 2020, 2019 and 2018, respectively. The Company also began ceding a small portion of its Commercial Earthquake premiums in November 2020, which accounted for approximately $7.1 million in ceded written premiums for the year ended December 31, 2020. No other quota share program accounted for more than 10% of total ceded written premiums for those years. The Company recognizes ceded unearned premiums related to quota share agreements as an asset on its consolidated balance sheets. As of December 31, 2020 and 2019, ceded unearned premiums totaled $35.0 million and $26.1 million, respectively. The increase was driven primarily by premium growth in lines subject to quota shares and the timing at which the Company entered quota share arrangements. As part of its reinsurance program, in May 2017, the Company obtained catastrophe protection through a reinsurance agreement with Torrey Pines Re Ltd. (“TPRe”). In connection with the reinsurance agreement, TPRe issued notes to unrelated investors in an amount equal to the full $166 million of coverage provided under the reinsurance agreement covering a three-year period, ending May 31, 2020. At the time of the agreement, the Company performed an evaluation of TPRe to determine if it meets the definition of a variable interest entity (“VIE”). The Company concluded that TPRe is a VIE but it does not have a variable interest in the entity, as the variability in results is expected to be absorbed entirely by the investors in TPRe. Accordingly, TPRe is not consolidated in the Company’s financial statements. The premium ceded to TPRe for the year ended December 31, 2020 was approximately $5.0 million. The effect of reinsurance on premiums written and earned and on losses and LAE incurred for the years ended December 31, 2020, 2019 and 2018, is as follows: 2020 2019 2018 Written Earned Written Earned Written Earned (in thousands) Premiums Written and Earned: Direct $ 324,253 $ 271,887 $ 220,568 $ 178,536 $ 144,821 $ 129,071 Assumed 30,107 29,569 31,393 21,985 10,070 8,688 Ceded (155,102) (146,388) (108,332) (100,314) (82,949) (67,862) Net $ 199,258 $ 155,068 $ 143,629 $ 100,207 $ 71,942 $ 69,897 2020 Losses LAE Total (in thousands) Losses and LAE Incurred: Direct $ 145,774 $ 18,777 $ 164,551 Assumed 3,485 159 3,644 Ceded (91,969) (12,111) (104,080) Net $ 57,290 $ 6,825 $ 64,115 2019 Losses LAE Total (in thousands) Losses and LAE Incurred: Direct $ 20,105 $ 2,837 $ 22,942 Assumed 1,201 34 1,235 Ceded (16,564) (2,020) (18,584) Net $ 4,742 $ 851 $ 5,593 2018 Losses LAE Total (in thousands) Losses and LAE Incurred: Direct $ 12,153 $ 2,113 $ 14,266 Assumed 46 6 52 Ceded (6,580) (1,464) (8,044) Net $ 5,619 $ 655 $ 6,274 The ceding of insurance does not legally discharge the Company from its primary liability for the full amount of the policy coverage, and therefore the Company will be required to pay the loss and bear collection risk if the reinsurer fails to meet its obligations under the reinsurance agreement. To minimize exposure to significant losses from reinsurance insolvencies, the Company evaluates the financial condition of its reinsurers and monitors concentrations of credit risk. To reduce credit exposure to reinsurance recoverable balances, the Company obtains letters of credit from certain reinsurers that are not authorized as reinsurers under U.S. state insurance regulations. In addition, under the terms of its reinsurance contracts, the Company may retain funds due from reinsurers as security for those recoverable balances. As of December 31, 2020 and 2019, the Company had retained $4.5 million and $1.7 million in funds from reinsurers, respectively. The Company is able to use the funds in the ordinary course of its business. The funds are held in cash and cash equivalents and investments with an offsetting liability on the accompanying consolidated balance sheets. For the year ended December 31, 2020, reinsurance premiums ceded to the Company’s three largest reinsurers totaled $9.7 million, $8.6 million, and $6.0 million, representing 22.4% of the total balance. For the year ended December 31, 2019, reinsurance premiums ceded to the Company’s three largest reinsurers totaled $21.7 million, $7.5 million, and $4.9 million, representing 31.5% of the total balance. For the year ended December 31, 2018, reinsurance premiums ceded to the Company’s three largest reinsurers totaled $7.5 million, $7.2 million, and $5.2 million, representing 24.0% of the total balance. At December 31, 2020 reinsurance recoverable on unpaid losses by the Company’s three largest reinsurers were $36.0 million, $5.8 million, and $3.1 million representing 42.8% of the total balance. At December 31, 2019 reinsurance recoverables on paid and unpaid losses by the Company’s three largest reinsurers were $2.7 million, $1.9 million, and $1.9 million representing 38.2% of the total balance. All of the Company’s reinsurers post collateral or have an A.M. best rating of A− (excellent) or better. |
Long-term Debt
Long-term Debt | 12 Months Ended |
Dec. 31, 2020 | |
Long-term Debt | |
Long-term Debt | 11. Long‑term Debt Prior to September 2018, the Company had $17.5 million in outstanding surplus notes which had been issued by PSIC on February 3, 2015 for a term of seven years. The surplus notes bore interest at the rate of LIBOR plus 8.00% and had restrictions as to payments of interest and principal and any such payment required the prior approval of the Oregon Insurance Commissioners before such payment could be made. Such payments could only be made from surplus. In September 2018, the Company completed a private placement financing of $20.0 million floating rate senior secured notes (the “Floating Rate Notes”), bearing interest at the three-month treasury rate plus 6.50% per annum. As part of the financing agreement, the Company immediately used surplus funds to pay down the existing $17.5 million in surplus notes. As part of this pre‑payment, the Company incurred a penalty of $0.1 million which, along with unamortized debt issuance costs of $0.4 million, was charged to income in 2018. The Floating Rate Notes were redeemed pursuant to their terms on May 23, 2019, at a redemption price equal to 102% of the principal amount of the Floating Rate Notes, or $20.4 million (plus $0.3 million of accrued and unpaid interest thereon). The Company recognized a charge of $1.3 million upon redemption with $0.4 million due to the redemption premium and $0.9 million due to the write‑off of unamortized debt issuance costs. The $0.4 million redemption premium was recognized as a component of interest expense and the $0.9 million issuance cost write‑off was recognized as a component of other underwriting expenses in the Company’s consolidated statements of income and comprehensive income. The Company incurred $1.1 million in interest expense related to the Floating Rate Notes for the year ended December 31, 2019 (inclusive of the $0.4 million redemption premium) and $0.6 million for the year ended December 31, 2018 and paid $1.2 million and $0.5 million for each period, respectively. The Company incurred and paid $1.2 million in interest expense related to the surplus notes for the year ended December 31, 2018. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders' Equity | |
Stockholders' Equity | 12. Stockholders’ Equity As of December 31, 2020 and December 31, 2019, the Company has 5,000,000 preferred shares authorized with a par value of $0.0001 and no preferred shares issued and outstanding. As of December 31, 2020 and December 31, 2019, the Company has 500,000,000 common shares authorized and 25,525,796 and 23,468,750 common shares issued and outstanding, respectively, with a par value of $0.0001. Additional paid in capital is $310.5 million as of December 31, 2020 and $180.0 million as of December 31, 2019. In March 2019, the Company made a one-time cash distribution totaling approximately $5.1 million to its then-sole stockholder, GC Palomar Investor LP, enabling it to distribute funds to its partners in order to allow such partners to satisfy tax obligations incurred as a result of the Domestication transactions. On April 22, 2019, the Company completed its IPO with the sale of 6,468,750 shares of common stock at a price to the public of $15.00 per share. The Company received net proceeds of approximately $87.4 million, after deducting underwriting discounts and commissions and offering costs. On January 9, 2020, the Company sold 750,000 shares of common stock to the public at a price of $49.00 per share (along with 5,000,000 shares sold by existing stockholders) in an underwritten public offering. The Company received net proceeds of approximately $35.5 million, after deducting underwriting discounts and commissions and offering costs. On June 26, 2020, the Company sold 1,150,000 shares of common stock to the public at a price of $82.00 per share in an underwritten public offering. The Company received net proceeds of approximately $90.1 million, after deducting underwriting discounts and commissions and offering costs. Common stock reserved for future issuance consists of the following as of December 31, 2020: Stock options outstanding under 2019 Equity Incentive Plan 1,008,648 Restricted stock units outstanding under 2019 Equity Incentive Plan 14,734 Shares authorized for future issuance under 2019 Equity Incentive Plan 1,952,001 Shares authorized for future issuance under 2019 Employee Stock Purchase Plan 451,633 Total 3,427,016 The below table summarizes the Company’s stock-based compensation expense for each period presented: Year ended December 31, 2020 2019 2018 (in thousands) Stock-Based Compensation Expense $ 2,167 $ 24,103 $ — Stock-based compensation expense is recognized on a straight-line basis over the vesting period of 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 consolidated statements of income and comprehensive income. The Company recognized approximately $23.0 million of stock-based compensation expense in March 2019 relating to the modification of its 2014 Management Incentive Plan. The Company began recognizing stock-based compensation expense relating to its 2019 Equity Incentive Plan and the 2019 Employee Stock Purchase Plan upon their inception and initial equity grants in April 2019. Aside from the aforementioned $23.0 million charge, all stock-based compensation expense recognized during the years ended December 31, 2020 and December 31, 2019 relates to the 2019 Equity Incentive Plan and 2019 Employee Stock Purchase Plan. Management Incentive Plan prior to IPO The Company’s former parent, GC Palomar Investor LP, adopted a 2014 Management Incentive Plan (in the form of profits interests) on February 12, 2014 under which certain officers and employees of PSIC and its affiliates were entitled to Class P Units in GC Palomar Investor LP. Class P unit holders were expected to realize value only upon the occurrence of liquidity events meeting requisite financial thresholds after the Class A unit holders recovered their investment. The Class P unit holders had no voting rights. The Company did not record stock-based compensation expense related to this plan prior to 2019 because no liquidity events were probable of occurring. On March 15, 2019, the Company modified its 2014 Management Incentive Plan by eliminating the requirement of a liquidity event to occur for the holders of its Class P units to realize value. The 12,552,825 Class P units outstanding were modified such that the vesting of each Class P unit holder’s awards was accelerated and their Class P distribution percentages were determined and distributed based on these percentages. This modification resulted in a stock compensation charge and corresponding increase to additional paid in capital of $23.0 million during the quarter ending March 31, 2019. The stock compensation charge is included in other underwriting expenses in the Company’s consolidated statements 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 are 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 or four year period with 25% or 50% vesting on the first anniversary of the grant date and the remainder vesting monthly over the remaining period, subject to continued service to the Company. Stock options expire ten years after the grant date. The following table summarizes stock option transactions for the year ended December 31, 2020: Weighted average remaining Aggregate Number of Weighted-average contractual term intrinsic value shares exercise price (in years) (in thousands) Outstanding at January 1, 2020 1,046,373 $ 17.05 $ 35,039 Options granted 109,374 80.90 Options exercised (122,613) 16.65 Options canceled (24,486) 21.46 Outstanding at December 31, 2020 1,008,648 $ 23.92 $ 66,028 Vested and Exercisable at December 31, 2020 522,464 $ 15.78 8.29 $ 38,170 The total intrinsic value of stock options exercised during the year ended December 31, 2020 was $7.7 million. No options were exercised prior to 2020. As of December 31, 2020, the Company had approximately $3.7 million of total unrecognized stock-based compensation expense related to stock options expected to be recognized over a weighted-average period of 2.27 years. The fair value of each option granted was estimated on the grant date using the Black-Scholes option pricing model with the following assumptions in each year presented: Year ended December 31, 2020 2019 2018 (in thousands) Risk free rate of return (1) 0.32% - 1.52% 1.59% - 2.45% — Expected share price volatility (2) 18.13% - 25.67% 18.12% - 18.45% — Expected life in years (3) 5.63-6.08 5.64-6.08 — Dividend yield (4) — (1) Determined based on the U.S. Treasury yield in effect at the time of the grant for zero-coupon U.S. Treasury notes with remaining terms similar to the expected term of the options. (2) Determined based on analysis of the historical volatility of a peer group of publicly traded companies. (3) Determined using the “simplified method” for estimating the expected option life, which is the average of the weighted-average vesting period and contractual term of the option as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time its common stock has been publicly traded. (4) Determined to be zero as the Company does not currently plan to issue dividends. Restricted Stock Units Restricted stock units are valued on their grant date and generally vest either on the first anniversary of the grant date or over a three-year period with one third vesting on each anniversary date, subject to continued service with the Company. The fair value of RSUs is determined using the closing price of the Company's common stock on the grant date. The following table summarizes RSU transactions for the year ended December 31, 2020: Weighted-average Number of grant date shares fair value Non vested outstanding at January 1, 2020 6,066 $ 16.49 Granted 14,734 95.86 Vested (6,066) 16.49 Forfeited — — Non vested outstanding at December 31, 2020 14,734 $ 95.86 As of December 31, 2020, the Company had approximately $1.2 million of total unrecognized stock-based compensation expense related to RSUs expected to be recognized over a weighted-average period of 2.41 years. 2019 Employee Stock Purchase Plan On April 16, 2019, the Company's 2019 Employee Stock Purchase Plan (“the 2019 ESPP”) became effective. A total of 240,000 shares of common stock are initially authorized and reserved for issuance under the 2019 ESPP. In addition, the 2019 ESPP provides for annual increases in the number of shares available for issuance on January 1 of each year through 2029, equal to the smaller of 240,000 shares of the Company’s common stock or such other amount as may be determined by the board of directors. Under the 2019 ESPP, employees can purchase Company stock at a discount via payroll withholdings. The 2019 ESPP is administered through employee participation in discrete offering periods. During each discrete offering period employee funds are withheld, and the stock purchase occurs upon the conclusion of the offering period. The Company issued 28,367 shares pursuant to the ESPP during the year ended December 31, 2020. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 12 Months Ended |
Dec. 31, 2020 | |
Accumulated Other Comprehensive Income | |
Accumulated Other Comprehensive Income | 13. Accumulated Other Comprehensive Income Changes in accumulated other comprehensive income (loss) (“AOCI”) are as follows: Year Ended December 31, 2020 2019 2018 (in thousands) Balance as of January 1 $ 4,686 $ (563) $ 2,993 Effect of equity accounting guidance adoption — — (3,215) Beginning Balance 4,686 (563) (222) Other comprehensive income (loss) before reclassification 11,292 6,555 (740) Federal income tax (expense) benefit (2,371) (1,344) 76 Other comprehensive income (loss) before reclassification, net of tax 8,921 5,211 (664) Amounts reclassified from AOCI (456) 47 399 Federal income tax expense (benefit) 95 (9) (76) Amounts reclassified from AOCI, net of tax (361) 38 323 Other comprehensive income (loss) 8,560 5,249 (341) Balance at end of period $ 13,246 $ 4,686 $ (563) |
Underwriting Information
Underwriting Information | 12 Months Ended |
Dec. 31, 2020 | |
Underwriting Information | |
Underwriting Information | 14. Underwriting Information The Company has a single reportable segment and offers primarily earthquake, wind, and flood insurance products. Gross written premiums (“GWP”) by product are presented below: Year Ended December 31, 2020 2019 2018 ($ in thousands) % of % of % of Amount GWP Amount GWP Amount GWP Product Residential Earthquake $ 140,934 39.8 % $ 130,473 51.8 % $ 81,679 % Commercial Earthquake 58,890 16.6 % 38,741 15.4 % 20,946 % Commercial All Risk 53,933 15.2 % 30,358 12.0 % 14,338 % Specialty Homeowners 49,849 14.1 % 32,788 13.0 % 27,680 % Inland Marine 15,423 4.3 % 2,465 1.0 % — — % Hawaii Hurricane 13,824 3.9 % 10,764 4.3 % 8,128 % Residential Flood 8,176 2.3 % 5,216 2.1 % 2,120 % Other 13,331 3.8 % 1,156 0.4 % — — % Total Gross Written Premiums $ 354,360 100.0 % $ 251,961 % $ 154,891 % Gross written premiums by state are as follows: Year Ended December 31, 2020 2019 2018 ($ in thousands) % of % of % of Amount GWP Amount GWP Amount GWP State California $ 172,765 48.8 % $ 141,743 % $ 82,119 % Texas 67,974 19.2 % 44,087 % 32,568 % Hawaii 16,398 4.6 % 11,851 % 8,128 % Washington 14,328 4.0 % 9,607 % 5,658 % North Carolina 11,143 3.1 % 3,894 % 1,568 % Oregon 10,038 2.8 % 7,396 % 5,286 % South Carolina 9,196 2.6 % 6,185 % 3,208 % Mississippi 7,461 2.1 % 4,769 % 2,585 % Other 45,057 12.8 % 22,429 % 13,771 % Total Gross Written Premiums $ 354,360 100.0 % $ 251,961 % $ 154,891 % The Company distributes a significant portion of its Residential Earthquake, Commercial Earthquake, Specialty Homeowners and Hawaii Hurricane products through longstanding relationships with two program administrators. Each of the four products managed by the program administrators operates as a separate program that is governed by an independent, separately negotiated agreement with unique terms and conditions, including geographic scope, key men provisions, economics and exclusivity. These programs also feature separate managerial oversight and leadership, policy administration systems and retail agents originating policies. In total, these four products accounted for $191.3 million or 54.0% of the Company’s gross written premiums for the year ended December 31, 2020, $148.6 million or 59.0% of the Company’s gross written premiums for the year ended December 31, 2019 and $104.9 million or 67.7% of the Company’s gross written premiums for the year ended December 31, 2018. |
Retirement and Post-Employment
Retirement and Post-Employment Retirement Plans | 12 Months Ended |
Dec. 31, 2020 | |
Retirement and Post-Employment Retirement Plans | |
Retirement and Post-Employment Retirement Plans | 15. Retirement and Post‑Employment Retirement Plans For employees meeting certain eligibility requirements, the Company provides a defined contribution retirement plan under IRC Section 401(k). Under a safe‑harbor plan, the Company contributes 3% of each participant’s gross wages regardless of the employee’s contribution. For the years ended December 31, 2020, 2019, and 2018 the Company’s contributions to the plan were $0.3 million, $0.3 million and $0.2 million, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2020 | |
Income Taxes | |
Income Taxes | 16. Income Taxes Prior to March 2019, the Company was a Cayman Islands incorporated holding company with U.K. tax residency. On March 14, 2019, the Company implemented a domestication (“the Domestication”) pursuant to Section 388 of the Delaware General Corporation Law and Section 206 of the Companies Law (2018 Revision), as amended, of the Cayman Islands pursuant to which it became a Delaware corporation and no longer subject to the laws of the Cayman Islands. Historically, the Company’s Bermuda based subsidiary, PSRE, was not required to pay any taxes on its income or capital gains but was subject to a 1% U.S. federal excise tax on reinsurance premiums assumed. The Company has elected for PSRE to be taxed as a U.S. domestic corporation under Section 953(d) of the Code effective January 1, 2019. The components of the Company’s federal income tax expense (benefit) are as follows: December 31, 2020 2019 2018 (in thousands) Current $ (1,128) $ 6,810 $ (6) Deferred 1,094 646 — Income tax expense (benefit) $ (34) $ 7,456 $ (6) As of December 31, 2020 and 2019, significant components of the Company’s deferred tax assets and liabilities were as follows: December 31, 2020 2019 (in thousands) Deferred tax assets: Losses and LAE reserve discount $ 238 $ 10 Net operating losses 680 74 Investment amortization — 85 Unearned premiums 6,272 3,748 Capitalized organizational costs 244 274 Deferred compensation 511 — Other 652 390 Total deferred tax assets $ 8,597 $ 4,581 Deferred tax liabilities: Deferred acquisition costs $ (7,454) $ (4,468) Unrealized gains on investments (3,884) (1,396) Internally developed software (1,283) (640) Other (672) (2) Total deferred tax liabilities (13,293) (6,506) Net deferred tax liability before valuation allowance (4,696) (1,925) Valuation allowance (680) (74) Total net deferred tax liabilities $ (5,376) $ (1,999) The valuation allowance shown above relates to deferred tax assets associated with state net operating loss carryforwards. These carryforwards do not meet the “more likely than not” criteria under ASC 740, Income Taxes due to the limited carryforward period. The amount of the deferred tax assets considered realizable could be adjusted if estimates of future taxable income during the carryforward period change or if objective negative evidence in the form of cumulative losses is no longer present. The following is a reconciliation of the statutory federal income tax rate to the Company’s effective tax rate for the tax years ended December 31, 2020, 2019 and 2018: Years Ended December 31, 2020 2019 2018 ($ in thousands) Expense computed at federal tax rate $ 1,321 21.00 % $ 3,802 21.00 % $ 3,825 21.00 % Non‑U.S. group member income — — % — — % (4,409) (24.21) % Stock-based compensation (1,538) (24.44) % 4,822 26.63 % — — % Dividend received deduction and tax‑exempt interest (67) (1.06) % (36) (0.20) % (144) (0.79) % Valuation allowance 606 9.63 % (1,677) (9.27) % 678 3.72 % Other (356) (5.67) % 545 3.01 % 44 0.24 % Income tax expense (benefit) $ (34) (0.54) % $ 7,456 41.17 % $ (6) (0.04) % The stock-based compensation difference shown above relates primarily to the permanent component of employee stock option exercises for the year ended December 31, 2020. For the year ended December 31, 2019, this difference relates primarily to a non-deductible stock compensation charge of $23.1 million incurred by the Company in March 2019. For the year ended December 31, 2020, the Company increased its valuation allowance relating to deferred tax assets associated with state net operating losses. The Company reversed the valuation allowance on its U.S. tax attributes during the year ended December 31, 2019 because of Domestication in the United States and projected future operating income in the U.S. As of December 31, 2020 and 2019, the Company had no uncertain tax positions that required either recognition or disclosure in the consolidated financial statements. This is not expected to change significantly during the next twelve months. The Company classifies interest and penalties, if any, related to the liability for unrecognized tax benefits as a component of the provision for income taxes. The Company’s income tax returns for 2015 through 2019 remain subject to examination by the tax authorities. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share | |
Earnings Per Share | 17 . Earnings Per Share The following table sets forth the computation of earnings per share of common stock: Year ended December 31, 2020 2019 2018 (in thousands, except shares and per share data) Net income $ 6,257 $ 10,621 $ 18,219 Weighted average common shares outstanding: Basic 24,872,251 21,501,541 17,000,000 Common Share equivalents 726,396 333,393 — Diluted 25,598,647 21,834,934 17,000,000 Earnings per share: Basic $ 0.25 $ 0.49 $ 1.07 Diluted $ 0.24 $ 0.49 $ 1.07 Common share equivalents relate to outstanding stock options and RSUs under the 2019 Plan and unpurchased shares under the 2019 ESPP and are calculated using the treasury stock method. |
Statutory financial information
Statutory financial information | 12 Months Ended |
Dec. 31, 2020 | |
Statutory financial information | |
Statutory financial information | 18. Statutory financial information U.S. U.S. state insurance laws and regulations prescribe accounting practices for determining statutory net income and capital and surplus for insurance companies. In addition, state regulators may permit statutory accounting practices that differ from prescribed practices. Statutory accounting practices (“SAP”) prescribed or permitted by regulatory authorities for the Company’s insurance subsidiaries differ from U.S. GAAP. The principal differences between SAP and GAAP as they relate to the financial statements of the Company’s insurance subsidiaries are (a) policy acquisition costs are expensed as incurred under SAP, whereas they are deferred and amortized under GAAP, (b) certain assets are not admitted for purposes of determining surplus under SAP, (c) investments in fixed income securities are carried at fair value under GAAP whereas such securities are carried at amortized cost under SAP, and (d) the criteria for recognizing net DTAs and the methodologies used to determine such amounts are different under SAP and GAAP. Combined statutory net income and statutory capital surplus for the U.S. insurance subsidiaries, PSIC and PESIC as of December 31, 2020, 2019 and 2018 and for the years then ended are summarized as follows: December 31, 2020 2019 2018 (in thousands) Statutory net income (loss) $ 1,753 $ (17,911) $ 9,609 Statutory capital and surplus 213,721 116,296 63,731 Risk‑Based Capital (“RBC”) requirements promulgated by the NAIC require property/casualty insurers to maintain minimum capitalization levels determined based on formulas incorporating various business risks of the insurance subsidiaries. As of December 31, 2020 and 2019, the company’s capital and surplus exceeds its authorized control level. Bermuda Under the Bermuda Insurance Act, 1978 and related regulations, PSRE is required to maintain certain solvency and liquidity levels. The minimum statutory solvency margin required at December 31, 2020 and 2019 was approximately $1.2 million and $1.2 million, respectively. Actual statutory capital and surplus at December 31, 2020 and 2019 was $39.2 million and $38.3 million, respectively. PSRE had statutory net income of $0.9 million, $18.5 million and $17.3 million for 2020, 2019 and 2018, respectively. PSRE had stockholder’s equity of $41.9 million and $39.7 million on a GAAP basis at December 31, 2020 and 2019, respectively. The principal difference between statutory capital and surplus and stockholder’s equity presented in accordance with GAAP are prepaid expenses, which are non‑admitted assets for Bermuda statutory purposes. PSRE maintains a Class 3A license and thus must maintain a minimum liquidity ratio in which the value of its relevant assets is not less than 75.0% of the amount of its relevant liabilities for general business. Relevant assets include cash and cash equivalents, fixed maturity securities, accrued interest income, premiums receivable, losses recoverable from reinsurers, and funds withheld. The relevant liabilities include total general business insurance reserves and total other liabilities, less sundry liabilities. As of December 31, 2020 and 2019, the Company met the minimum liquidity ratio requirement. |
Dividend Restrictions
Dividend Restrictions | 12 Months Ended |
Dec. 31, 2020 | |
Dividend Restrictions | |
Dividend Restrictions | 19. Dividend Restrictions U.S. The Company’s U.S. insurance company subsidiaries, PSIC and PESIC are restricted by the statutes as to the amount of dividends that they may pay without prior approval by state insurance commissioners. Under California and Oregon statute which govern PSIC, dividends paid in a consecutive twelve month period cannot exceed the greater of (i) 10% of an insurance company’s statutory policyholders’ surplus as of December 31 of the preceding year or (ii) 100% of its statutory net income for the preceding calendar year. Any dividends or distributions in excess of these amounts would require regulatory approval. In addition, under Oregon statute, PSIC may only declare a dividend from earned surplus, which does not include contributed capital. Surplus arising from unrealized capital gains or revaluation of assets is not considered part of earned surplus. Based on the above restrictions, PSIC may pay a dividend or distribution of no greater than $11.3 million in 2021 without approval by the California and Oregon Insurance Commissioners. Under Arizona statute with governs PESIC, dividends paid in a consecutive twelve month period cannot exceed the lesser of (i) 10% of an insurance company’s statutory policyholders’ surplus as of December 31 of the preceding year or (ii) 100% of its statutory net income for the preceding calendar year. As such, PESIC is unable to pay a dividend or distribution in 2021 without the approval of the Arizona Insurance Commissioner as it had a statutory net loss in 2020. In addition to the above limitations, any dividend or distribution declared is also subject to state regulatory approval prior to payment. In the future, state insurance regulatory authorities may adopt statutory provisions and dividend limitations more restrictive than those currently in effect. Bermuda Bermuda regulations limit the amount of dividends and return of capital paid by a regulated entity. A Class 3A insurer is prohibited from declaring or paying a dividend if it is in breach of its minimum solvency margin, its enhanced capital requirement, or its minimum liquidity ratio, or if the declaration or payment of such dividend would cause such a breach, or if there are reasonable grounds for believing there has been such a breach. Pursuant to Bermuda regulations, the maximum amount of dividends and return of capital available to be paid by a reinsurer is determined pursuant to a formula. Under this formula, the maximum amount of dividends and return of capital available to the Company from PSRE during 2021 is calculated to be approximately $10.5 million. However, this dividend amount is subject to annual enhanced solvency requirement calculations. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2020 | |
Commitments and Contingencies | |
Commitments and Contingencies | 20. Commitments and Contingencies Litigation The Company is subject to legal proceedings arising from the normal conduct of its business. In the opinion of management, any ultimate liability that may arise from these proceedings will not have a material effect on the Company’s financial position. Letters of Credit As of December 31, 2020, the Company has three irrevocable standby letters of credit for the benefit of ceding insurance companies to secure the unearned premium assumed by PSIC. The bank letters of credit amount to $1.5 million, $0.5 million and $0.4 million. The $1.5 million and $0.4 million letters of credit expire December 31, 2021 with no renewal terms. The $0.4 million letter of credit auto renews each year. The letters of credit are collateralized by $3.2 million of U.S. Treasury bonds which are included in available‑for‑sale investments on the consolidated balance sheets. |
Selected Quarterly Financial Da
Selected Quarterly Financial Data (unaudited) | 12 Months Ended |
Dec. 31, 2020 | |
Selected Quarterly Financial Data (unaudited) | |
Selected Quarterly Financial Data (unaudited) | 21. Selected Quarterly Financial Data (unaudited) The following is a summary of the Company’s unaudited quarterly results of operations: 2020 Quarter 2020 First Second Third Fourth Year ($ in thousands, except per share data) Gross written premiums $ 71,494 $ 83,807 $ 102,967 $ 96,092 $ 354,360 Total revenues (1) 38,019 43,149 44,998 42,295 168,463 Net income (loss) 11,776 12,012 (15,682) (1,849) 6,257 Comprehensive income (loss) 5,943 22,688 (14,773) 959 14,817 Earnings per share (2): Basic $ 0.49 $ 0.49 $ (0.62) $ $ 0.25 Diluted $ 0.48 $ 0.48 $ (0.62) $ $ 0.24 2019 Quarter 2019 First Second Third Fourth Year ($ in thousands, except per share data) Gross written premiums $ 54,031 $ 58,346 $ 66,242 $ 73,342 $ 251,961 Total revenues 22,307 25,905 30,461 34,623 113,296 Net income (loss) (14,411) 6,698 7,454 10,880 10,621 Comprehensive income (loss) (12,224) 9,996 8,428 9,670 15,870 Earnings per share (2): Basic $ (0.85) $ 0.30 $ 0.32 $ $ Diluted $ (0.85) $ 0.30 $ 0.31 $ $ (1) Due to rounding differences, quarterly total revenues does not add up to the yearly total. (2) Due to differences in weighted-average common shares outstanding between periods, quarterly earnings per share may not add up to the totals reported for the full year. |
Schedule II
Schedule II | 12 Months Ended |
Dec. 31, 2020 | |
Schedule II | |
Schedule II | Schedule II Palomar Holdings, Inc. and Subsidiaries Balance Sheets (Parent Company) (In Thousands, except shares and par value data) December 31, December 31, 2020 2019 Assets Investments: Fixed maturity securities available for sale, at fair value (amortized cost: $50,177 in 2020, $28,413 in 2019) $ 51,252 $ 29,120 Equity securities, at fair value: (cost: $1,661 in 2020, $1,661 in 2019) 1,727 1,696 Total investments 52,979 30,816 Cash and cash equivalents 7,290 1,654 Accrued investment income 300 126 Prepaid expenses and other assets 7,322 36 Receivables from subsidiaries 1,552 — Investment in subsidiaries 317,663 189,313 Total assets $ 387,106 $ 221,945 Liabilities and Stockholders' equity Liabilities: Accounts payable and other liabilities $ 94 $ 268 Payables to subsidiaries 17,923 — Federal income tax payable — 1,122 Deferred tax liabilities 5,376 1,999 Total liabilities 23,393 3,389 Stockholders' equity: Preferred stock, $0.0001 par value, 5,000,000 shares authorized as of December 31, 2020 and December 31, 2019, respectively, 0 shares issued and outstanding as of December 31, 2020 and December 31, 2019 — — Common stock, $0.0001 par value, 500,000,000 shares authorized, 25,525,796 and 23,468,750 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively 3 2 Additional paid‑in capital 310,507 180,012 Accumulated other comprehensive income 13,246 4,686 Retained earnings 39,957 33,856 Total stockholders' equity 363,713 218,556 Total liabilities and stockholders' equity $ 387,106 $ 221,945 See accompanying notes. Schedule II Palomar Holdings, Inc. and Subsidiaries Statements of Income (Parent Company) (In Thousands) Year Ended December 31, 2020 2019 2018 Revenues: Net investment income $ 939 $ 1,039 $ 61 Net realized and unrealized losses on investments 63 131 (2) Total revenues 1,002 1,170 59 Expenses: Other operating expenses 8,696 8 — Income (loss) before income taxes (7,694) 1,162 59 Income tax expense (benefit) (34) 7,441 — Income (loss) before equity in net income of subsidiaries (7,660) (6,279) 59 Equity in net income of subsidiaries 13,917 16,900 18,160 Net income 6,257 10,621 18,219 Other comprehensive income: Net unrealized losses on securities available for sale 1,075 708 (87) Equity in other comprehensive income of subsidiaries, net of taxes 7,485 4,541 (254) Total comprehensive income $ 14,817 $ 15,870 $ 17,878 See accompanying notes. Schedule II Palomar Holdings, Inc. and Subsidiaries Statements of Cash Flows (Parent Company) (In Thousands) Year Ended December 31, 2020 2019 2018 Operating activities Net income $ 6,257 $ 10,621 $ 18,219 Adjustments to reconcile net income to net cash provided by operating activities: Equity in undistributed earnings of subsidiaries (13,917) (16,900) (18,160) Net realized and unrealized losses on investments (63) (131) 2 Amortization of premium on fixed maturity securities 350 114 — Deferred income tax expense 1,094 646 — Other — — 546 Changes in operating assets and liabilities: 7,772 4,218 (67) Net cash provided by (used in) operating activities 1,493 (1,432) 540 Investing activities Purchases of fixed maturity securities (71,048) (73,901) — Sales and maturities of fixed maturity securities 6,651 13,930 Cash paid to subsidiaries (59,789) — — Cash received from subsidiaries — 226 — Net cash used in investing activities (124,186) (59,745) — Financing activities Proceeds from initial public offering, net of offering costs — 87,411 — Distribution to stockholder — (5,120) — Redemption of Floating Rate Notes — (20,000) — Proceeds from January 2020 stock offering, net of offering costs 35,464 — — Proceeds from June 2020 stock offering, net of offering costs 90,083 — — Proceeds from common stock issued via equity incentive plans 2,782 — — Net cash provided by financing activities 128,329 62,291 — Net increase in cash and cash equivalents 5,636 1,114 540 Cash and cash equivalents at beginning of period 1,654 540 — Cash and cash equivalents at end of period $ 7,290 $ 1,654 $ 540 Supplementary cash flow information: Cash paid for income taxes $ 7,182 $ 5,645 $ — See accompanying notes. Schedule II 1. Organization Palomar Holdings, Inc. (“the Company”), is an insurance holding company that domesticated in Delaware in March 2019. Prior to domestication in Delaware, the Company was known as GC Palomar Holdings (“GCPH”), which was a Cayman Islands incorporated insurance holding company formed on October 4, 2013 when GC Palomar Investor LP (“GCPI”) acquired control of GCPH. Basis of Presentation The accompanying condensed financial statements have been prepared using the equity method. Under the equity method, the investment in consolidated subsidiaries is stated at cost plus equity in undistributed earnings of consolidated subsidiaries since the date of acquisition. These condensed financial statements should be read in conjunction with the Company’s consolidated financial statements. Estimates and Assumptions Preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying disclosures. Those estimates are inherently subject to change, and actual results may ultimately differ from those estimates. |
Schedule V - Valuation and Qual
Schedule V - Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2020 | |
Valuation and Qualifying Accounts | |
Valuation and Qualifying Accounts | Schedule V Palomar Holdings, Inc. and Subsidiaries Valuation and Qualifying Accounts Additions Deductions Balance at Amounts Amounts Balance at Beginning Charged to Written End of (in thousands) of Period Expense Off Period Year Ended December 31, 2020 Valuation Allowance for deferred tax assets $ 74 $ 606 $ — $ 680 Valuation Allowance for premium receivable 150 53 — 203 Year Ended December 31, 2019 Valuation Allowance for deferred tax assets $ 1,677 $ — $ (1,603) $ 74 |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2020 | |
Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and include the accounts of the Company and its wholly‑owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Stock Split | Stock Split On March 15, 2019, the Company effected a 17,000,000 for one forward stock split in conjunction with domestication in the United States. All share and per share information included in the accompanying consolidated financial statements and notes to the consolidated financial statements have been retroactively adjusted to reflect the stock split for the Company’s common stock for all periods presented. |
Initial Public Offering (IPO) | Initial Public Offering (“IPO”) On April 22, 2019, the Company completed its IPO with the sale of 6,468,750 shares of common stock at a price to the public of $15.00 per share, including 843,750 shares sold upon the exercise in full of the underwriter’s option to purchase additional shares. After underwriter discounts and commissions and offering expenses, net proceeds from the IPO were approximately $87.4 million. |
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 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 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. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include time deposits and marketable securities with original maturities of three months or less at acquisition and are stated at cost, which approximates fair value. The Company maintains cash balances in federally insured financial institutions. |
Restricted Cash | Restricted Cash Restricted cash includes cash on deposit with reinsurance carriers. Restricted cash also includes cash held in a fiduciary capacity for the benefit of third-party insurance carriers. |
Investments | Investments All of the Company’s investments in fixed maturity securities are classified as available‑for‑sale and are carried at fair value. Investment income consists primarily of interest and dividends. Interest income is recognized on an accrual basis. Premiums and discounts on mortgage‑backed securities and asset‑backed securities are amortized or accrued using the prospective method which considers anticipated prepayments at the date of purchase. To the extent that the estimated lives of such securities change as a result of changes in estimated prepayment rates, the adjustments are included in net investment income using the prospective method. Dividend income is recognized on the ex‑dividend date. Net investment income represents investment income, net of expenses. Unrealized gains and losses related to fixed maturity securities are included in accumulated other comprehensive income as a separate component of stockholders’ equity. Equity securities are carried at fair value with unrealized gains and losses included as a component of net income on the Company’s consolidated statement of income and comprehensive income. The Company uses the specific‑identification method to determine the cost of fixed maturity securities sold and the first‑in, first‑out method for lots of equity securities sold. 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. Factors considered in the review include the extent to which the fair value has been less than amortized cost, and current market interest rates and whether the unrealized loss is credit‑driven or a result of changes in market interest rates. The Company also considers factors specific to the issuer including the general financial condition of the issuer, the issuers industry and future business prospects, any past failure of issuer to make scheduled interest or principal payments, and the payment structure of the investment and the issuers ability to make contractual payments on the investment. The Company also considers whether it intends to sell the security or if it is more likely than not that it will be required to sell the security before recovery of its amortized cost. When assessing whether it intends to sell a fixed-maturity security or if it is likely to be required to sell a fixed-maturity security before recovery of its amortized cost, the Company evaluates facts and circumstances including, but not limited to, decisions to reposition the investment portfolio, potential sales of investments to meet cash flow needs, and potential sales of investments to capitalize on favorable pricing. For fixed-maturity securities where a decline in fair value is below the amortized cost basis and the Company intends to sell the security, or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost, a credit-loss charge is recognized in net income based on the fair value of the security at the time of assessment. For fixed-maturity securities that the Company has the intent and ability to hold, the Company compares the estimated present value of the cash flows expected to be collected to the amortized cost of the security. The extent to which the estimated present value of the cash flows expected to be collected is less than the amortized cost of the security represents the credit-related portion of the impairment, which is recognized in net income through an allowance for credit losses. Any remaining decline in fair value represents the noncredit portion of the impairment, which is recognized in other comprehensive income. The Company reports accrued interest receivable as a component of accrued investment income on its consolidated balance sheet which is presented separately from available-for-sale securities. The Company does not measure an allowance for credit losses on accrued interest receivable and instead would write off accrued interest receivable at the time an issuer defaults or is expected to default on payments. Prior to the adoption of ASU 2016-13, the Company evaluated fixed maturity securities for credit losses and any losses were bifurcated into the credit‑related loss and the loss related to all other factors. The credit‑related impairment loss would have been recognized as a realized loss in the statement of income and comprehensive income and the cost basis of the security would have been reduced. The impairment related to other factors would have remained in accumulated other comprehensive income. The Company did not recognize any credit losses during the years ended December 31, 2020 and 2019 related to its available-for-sale securities. |
Fair Value | Fair Value 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 valuation 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 fair value of the Company’s investments in equity securities is based on quoted prices available in active markets and classified and disclosed in Level 1 of the hierarchy. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, fixed maturity securities and reinsurance recoverables. The Company places its cash and cash equivalents with high credit quality financial institutions and its fixed maturity securities in securities of the U.S. government, U.S. government agencies, and high credit quality issuers of debt securities. The Company evaluates the financial condition of its reinsurers and reinsures its business with highly rated reinsurers and sometimes requires letters of credit or retains funds from reinsurers (see Note 10). |
Premiums Receivable | Premiums Receivable Premiums receivable represent amounts due from policyholders, insurance agents, or program administrators for policies written. Generally, premiums are collected prior to providing risk coverage, minimizing the Company’s exposure to credit risk. Premiums receivable are short-term in nature and due within a year. The Company has established an allowance for uncollectable premiums related to its credit risk, which it reviews on a quarterly basis and adjusts as appropriate. The company considers the current economic environment, specific regulatory developments, and historic payment and cancelation trends by line of business and location when determining whether to record an allowance for uncollectable premiums. Prior to December 31, 2019, the Company did not have an allowance for uncollectable premiums. An initial allowance for uncollectable premiums of $0.2 million was established upon adoption of ASC 2016-13 on January 1, 2020 and the company recognized an immaterial amount of credit losses relating to uncollectable premiums during the year ended December 31, 2020. |
Deferred Policy Acquisition Costs | Deferred Policy Acquisition Costs The costs of successfully acquiring new business, principally commission expense and premium taxes, are deferred and amortized over the terms of the policies in force, net of any ceding commissions. |
Premiums Earned | Premiums Earned Gross premiums written are recorded at policy inception and are earned as revenue ratably over the term of the respective policies. Premiums written not yet recognized as revenue are reflected as unearned premiums on the balance sheet, or as advanced premiums if received prior to the policy effective date. Premiums written where cash is not yet received are recognized as premiums receivable. A premium deficiency is recognized if the sum of expected losses and loss adjustment expenses, unamortized acquisition costs, and policy maintenance costs exceeds the remaining unearned premiums. A premium deficiency would first be recognized by charging any unamortized acquisition costs to expense to the extent required to eliminate the deficiency. If the premium deficiency were greater than unamortized acquisition costs, a liability would be accrued for the excess deficiency. The Company does not consider anticipated investment income when determining if a premium deficiency exists. There was no premium deficiency at December 31, 2020 or 2019. |
Commission and Other Income | Commission and Other Income Commission and other income is comprised of commissions earned on policies where the Company has no exposure to underlying risk and fees earned in conjunction with underwriting policies. Commission and fee income is earned at the time the policy is written. |
Property and Equipment | Property and Equipment Property and equipment are capitalized and carried at cost less accumulated depreciation. Depreciation for property and equipment is calculated on a straight‑line basis using useful lives of 3 to 5 years. Leasehold improvements and other fixed assets are capitalized and depreciated over the useful lives of the properties and equipment. Expenditures for maintenance and repairs are charged to operations as incurred. Upon disposition, the asset cost and related depreciation are removed from the accounts and the resulting gain or loss is included in the Company’s results of operations. |
Capitalized Software | Capitalized Software Costs associated with the implementation of certain internal systems are capitalized and carried at capitalized cost less accumulated amortization and are included as a component of prepaid expenses and other assets on the Company’s consolidated balance sheet. Costs capitalized include internal personnel costs, external developer costs, and interest. The implementation costs relate to systems built on software which the Company purchases under a cloud computing arrangement and accounts for as a service contract. As such, capitalized costs are amortized over the term of the service contract, which currently ends in December 2024. |
Intangible Assets | Intangible Assets Intangible assets consist of both finite and indefinite lived assets. Finite lived intangible assets consist of customer relationships acquired from another insurer during 2020. Indefinite lived intangible assets consist of state licenses acquired upon formation of the Company. Intangible assets are initially recognized and measured at fair value and are subsequently evaluated for impairment annually or more frequently if circumstances warrant it. No impairments of intangible assets were recognized for the years ended December 31, 2020, 2019 or 2018. |
Impairment of Long-Lived Assets | Impairment of Long‑Lived Assets Long‑lived assets with finite lives are tested for impairment whenever recognized events or changes in circumstances indicate the carrying value of these assets may not be recoverable. If indicators of impairment are present, the fair value is calculated using estimated future cash flows expected to be generated from the use of those assets. An impairment loss is recognized only if the carrying amount of a long‑lived asset or asset group is not recoverable and exceeds its fair value. The carrying amount of a long‑lived asset or asset group is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset or asset group. This assessment is based on the carrying amount of the asset or asset group at the date it is tested for recoverability. An impairment loss is measured as the amount by which the carrying amount of a long‑lived asset or asset group exceeds its fair value. No impairments of long‑lived assets were recognized for the years ended December 31, 2020, 2019 and 2018. |
Reserve for Losses and Loss Adjustment Expenses | Reserve for Losses and Loss Adjustment Expenses The reserve for unpaid losses and loss adjustment expenses includes estimates for unpaid claims and claim adjustment expenses on reported losses and estimates of losses incurred but not reported (“IBNR”), net of salvage and subrogation recoveries. The liability is based on individual claims, case reserves and other estimates reported by policyholders, as well as management estimates of ultimate losses and loss adjustment expenses. Inherent in the estimates of ultimate losses and loss adjustment expenses are expected trends in claims severity and frequency and other factors that could vary significantly as claims are settled. The Company’s estimates of ultimate losses and loss adjustment expenses are based in part upon the estimation of claims resulting from natural disasters such as hurricanes and earthquakes. Estimation by management of the ultimate losses and loss adjustment expenses resulting from catastrophic events is inherently difficult because of the potential severity of property catastrophe claims. Therefore, the Company uses both proprietary and commercially available models, as well as historic claims experience, for purposes of providing an estimate of ultimate losses and loss adjustment expenses. Reserves for IBNR are established in accordance with industry practice to provide for (i) the estimated amount of future loss payments on incurred claims not yet reported, and (ii) potential development on reported claims. IBNR reserves are estimated based on generally accepted actuarial reserving techniques that consider quantitative loss experience data and, where appropriate, qualitative factors. Ultimate losses and loss adjustment expenses may vary materially from the amounts provided in the consolidated financial statements. Estimates of unpaid losses and loss adjustment expenses are reviewed regularly and, as experience develops and new information becomes known, the liabilities are adjusted as necessary. Such adjustments, if any, are reflected in operations in the period in which they become known and are accounted for as changes in estimates. The Company does not discount its liability for unpaid losses and loss adjustment expenses. The Company does not write insurance policies covering toxic clean‑up, asbestos‑related illness or other environmental remediation exposures. |
Reinsurance | Reinsurance The Company purchases excess of loss and quota share reinsurance to protect it against the impact of losses. Reinsurance premiums, commissions, ceded unearned premiums are accounted for on bases consistent with the underlying terms of the reinsurance contracts and in proportion to the amount of insurance protection provided. The Company receives ceding commissions in connection with quota share reinsurance. The ceding commissions are capitalized and amortized as a reduction of acquisition expenses. Amounts applicable to ceded unearned premiums are reported as assets in the accompanying consolidated balance sheets. Premiums earned and losses and loss adjustment expenses incurred are stated in the accompanying consolidated statements of income and comprehensive income net of amounts ceded to reinsurers. Reinsurance recoverables represent balances due to the Company from its reinsurers for paid and unpaid losses and loss adjustment expenses. The Company is exposed to credit losses from reinsurers being unable to meet their obligations. The Company evaluates the financial condition of potential reinsurers and reinsures its business only with highly rated reinsurers with a rating of “A-“ (Excellent) (Outlook Stable) or better from A.M. Best. Reinsurers who do not meet the Company’s rating criteria are required to post collateral. The Company reviews credit quality of its reinsurers on a quarterly basis. The Company’s reinsurance contracts also include special termination provisions that allow the Company to cancel and replace any participating reinsurer that is downgraded below a rating of “A−” from A.M. Best, or whose surplus drops by more than 20%. Historically, the Company has not experienced any credit losses from reinsurance recoverables and did not have an allowance for uncollectable reinsurance recoverables as of December 31, 2020 or December 31, 2019. |
Stock Based Compensation Expense | Stock Based Compensation Expense Stock-based compensation expense is recognized on a straight-line basis over the vesting period of awards. The Company does not apply a forfeiture rate to unvested awards and accounts for forfeitures as they occur. For stock option grants, the fair value of awards is estimated using the Black Scholes Model. The fair value of restricted stock units is determined using the closing price of the Company's common stock on the grant date. All stock-based compensation is included in other underwriting expenses in the Company’s consolidated statements of income and comprehensive income. |
Income Taxes | Income Taxes The Company is taxed as a property/casualty insurer for federal income tax purposes. Deferred income tax assets and liabilities are determined based on the difference between the financial statement and the tax bases of assets and liabilities, using enacted tax rates expected to be in effect during the year in which the basis differences reverse. The effect on deferred taxes of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. The Company recognizes the tax benefit of uncertain tax positions where the position is more likely than not to be sustained assuming examination by taxing authorities. Based on its evaluation for the tax years ended December 31, 2020 and 2019, the Company has concluded that there are no significant uncertain tax positions requiring recognition in its financial statements. The Company recognizes interest and penalties related to uncertain tax positions, if any, as a component of income tax expense. The Company has not been assessed interest or penalties by any major tax jurisdictions for the respective tax years ended December 31, 2020, 2019, and 2018. |
Earnings Per Share | Earnings Per Share Basic earnings per share is calculated by dividing net income by the weighted‑average common shares outstanding for the period. Diluted earnings per share reflects the dilution which could occur if equity-based awards are converted into common share equivalents as calculated using the treasury stock method. When inclusion of additional common share equivalents increases the earnings per share or reduces the loss per share, the effect on earnings per share is anti-dilutive, and the diluted net earnings or net loss per share is computed excluding these common share equivalents. |
Recent Accounting Pronouncements | Recently adopted accounting pronouncements Clarification on change in filing status and prior quarterly information Prior to December 31, 2020, the Company qualified as an emerging growth company (“EGC”) under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. The Company was previously electing to adopt new or revised accounting guidance within the same time periods as private companies as permitted by its status as an EGC. The Company became a large accelerated filed on December 31, 2020 and must now adopt new accounting guidance within the same time periods as public companies, beginning with this 2020 Annual Report on Form 10-K. Prior to this annual report, the Company’s 2020 quarterly filings did not reflect adoption of the below guidance as the Company was not required to have adopted it. Upon adoption of the below guidance, the Company updated its financials as if the below guidance was adopted on January 1, 2020, however, this adoption had a negligible impact on previously filed quarterly information. Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued new guidance for accounting for leases, ASU 2016‑02, Leases (Topic 842) and subsequently issued multiple clarifying updates to the guidance. This updated guidance requires the recognition of a right‑of‑use (“ROU”) asset and a corresponding lease liability, discounted to the present value, for all leases that extend beyond 12 months. Under the previous guidance, leases were only included on the balance sheet if the criteria to classify the agreement as a capital lease were met. The Company adopted this new guidance as of January 1, 2020. The Company adopted this guidance using the modified retrospective transition method, applying the transition provisions on the date of adoption and not restating prior periods. The Company elected to use a number of practical expedients permitted under the transition guidance, but did not elect to use hindsight in determining the lease term. Upon adoption, the Company recognized a ROU asset of $2.9 million and lease liabilities of $3.8 million, with the difference representing the reclassification of deferred rent and lease incentive liabilities (the difference between the straight-line rent expenses and cash paid for rent under the leases) to operating lease ROU assets from other liabilities. The ROU asset and corresponding liability recognized pertained to various operating leases for office space. The Company did not have any cumulative-effect adjustment because of the adoption. Measurement of credit losses In June 2016, the FASB issued ASU 2016‑13, Financial Instruments-Credit Losses (Topic 326) and subsequently issued multiple clarifying updates to the guidance. This updated guidance requires financial assets measured at amortized cost to be presented at the net amount expected to be collected by means of an allowance for credit losses that is included in net income. Credit losses relating to available-for-sale debt securities are also required to be recorded through a reversible allowance for credit losses, but the allowance is limited to the amount by which fair value is less than amortized cost. The previous accounting guidance delayed the recognition of credit losses until it was probable a loss had been incurred. The Company adopted this guidance on January 1, 2020 using the modified retrospective approach and recorded a $0.2 million cumulative effect adjustment to beginning retained earnings upon adoption relating to an allowance for credit losses on the Company’s premium receivables. The adoption of this accounting guidance did not have an impact on value of the Company’s fixed maturity securities or its reinsurance recoverables. Recently issued accounting pronouncements not yet adopted Income Taxes In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes. Among other things, ASU 2019-12 eliminates certain exceptions for recognizing deferred taxes for investments, performing intra-period tax allocation and calculating income taxes in interim periods. ASU 2019-12 also clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. ASU 2019-12 is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company will adopt this guidance in the first fiscal quarter of 2021 and does not expect adoption to have a material impact on its consolidated financial statements. |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Investments | |
Schedule of available-for-sale investments | Gross Gross Amortized Unrealized Unrealized Fair December 31, 2020 Cost or Cost Gains Losses Value (in thousands) Fixed maturities: U.S. Governments $ 16,308 $ 756 $ (5) $ 17,059 States, territories, and possessions 6,208 428 — 6,636 Political subdivisions 2,027 125 — 2,152 Special revenue excluding mortgage/asset-backed securities 39,704 1,525 (2) 41,227 Industrial and miscellaneous 234,049 11,602 (291) 245,360 Mortgage/asset-backed securities 82,983 2,785 (215) 85,553 Total available-for-sale investments $ 381,279 $ 17,221 $ (513) $ 397,987 Gross Gross Amortized Unrealized Unrealized Fair December 31, 2019 Cost or Cost Gains Losses Value (in thousands) Fixed maturities: U.S. Governments $ 13,371 $ 321 $ (13) $ 13,679 States, territories, and possessions 2,298 147 — 2,445 Political subdivisions 1,913 29 — 1,942 Special revenue excluding mortgage/asset-backed securities 18,139 343 (46) 18,436 Industrial and miscellaneous 124,726 4,326 (39) 129,013 Mortgage/asset-backed securities 50,831 824 (19) 51,636 Total available-for-sale investments $ 211,278 $ 5,990 $ (117) $ 217,151 |
Schedule of aggregate fair value and gross unrealized losses | Less Than 12 Months More Than 12 Months Total Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2020 Value Losses Value Losses Value Losses (in thousands) Fixed maturity securities: U.S. Governments $ 1,496 $ (5) $ — $ — $ 1,496 $ (5) States, territories, and possessions — — — — — — Political subdivisions — — — — — — Special revenue excluding mortgage/asset-backed securities 520 (2) — — 520 (2) Industrial and miscellaneous 22,718 (234) 203 (57) 22,921 (291) Mortgage/asset-backed securities 16,092 (211) 496 (4) 16,588 (215) Total $ 40,826 $ (452) $ 699 $ (61) $ 41,525 $ (513) Less Than 12 Months More Than 12 Months Total Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2019 Value Losses Value Losses Value Losses (in thousands) Fixed maturity securities: U.S. Governments $ 1,235 $ (11) $ 1,827 $ (2) $ 3,062 $ (13) States, territories, and possessions — — — — — — Political subdivisions — — — — — — Special revenue excluding mortgage/asset-backed securities 3,548 (46) — — 3,548 (46) Industrial and miscellaneous 6,929 (38) 188 (1) 7,117 (39) Mortgage/asset-backed securities 7,035 (19) 182 — 7,217 (19) Total $ 18,747 $ (114) $ 2,197 $ (3) $ 20,944 $ (117) |
Schedule of contractual maturities of available-for-sale securities | Amortized Fair Cost Value (in thousands) Due within one year $ 11,222 $ 11,351 Due after one year through five years 146,302 151,123 Due after five years through ten years 99,194 106,600 Due after ten years 41,578 43,360 Mortgage and asset-backed securities 82,983 85,553 $ 381,279 $ 397,987 |
Schedule of change in unrealized gains (losses) of investments | Year Ended December 31, 2020 2019 2018 (in thousands) Change in net unrealized gains (losses) Fixed maturities $ 10,835 $ 6,602 $ (341) Net increase (decrease) $ 10,835 $ 6,602 $ (341) |
Schedule of net investment income | December 31, 2020 2019 2018 (in thousands) Interest income $ 8,554 $ 5,894 $ 3,036 Dividend income 489 424 514 Investment management fees and expenses (431) (343) (312) Net investment income $ 8,612 $ 5,975 $ 3,238 |
Schedule of net realized and unrealized investment gains and losses | Year Ended December 31, 2020 2019 2018 (in thousands) Realized gains: Gains on sales of fixed maturity securities $ 501 $ 1,405 $ 19 Gains on sales of equity securities 62 177 4,287 Total realized gains 563 1,582 4,306 Realized losses: Losses on sales of fixed maturity securities (46) (84) (418) Losses on sales of equity securities (68) (64) (421) Total realized losses (114) (148) (839) Net realized investment gains 449 1,434 3,467 Net unrealized gains (losses) on equity securities 1,039 3,009 (6,036) Net realized and unrealized gains (losses) on investments $ 1,488 $ 4,443 $ (2,569) |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Fair Value Measurements | |
Schedule of fair value hierarchy for financial assets and liabilities | December 31, 2020 Level 1 Level 2 Level 3 Total (in thousands) Assets: Fixed maturity securities U.S. Governments $ — $ 17,059 $ — $ 17,059 States, territories, and possessions — 6,636 — 6,636 Political subdivisions — 2,152 — 2,152 Special revenue excluding mortgage/asset-backed securities — 41,227 — 41,227 Industrial and miscellaneous — 245,360 — 245,360 Mortgage/asset-backed securities — 85,553 — 85,553 Equity securities 24,322 — — 24,322 Cash, cash equivalents, and restricted cash 33,786 — — 33,786 Total assets $ 58,108 $ 397,987 $ — $ 456,095 December 31, 2019 Level 1 Level 2 Level 3 Total (in thousands) Assets: Fixed maturity securities U.S. Governments $ — $ 13,679 $ — $ 13,679 States, territories, and possessions — 2,445 — 2,445 Political subdivisions — 1,942 — 1,942 Special revenue excluding mortgage/asset-backed securities — 18,436 — 18,436 Industrial and miscellaneous — 129,013 — 129,013 Mortgage/asset-backed securities — 50,136 1,500 51,636 Equity securities 22,328 — — 22,328 Cash, cash equivalents, and restricted cash 28,350 4,999 — 33,349 Total assets $ 50,678 $ 220,650 $ 1,500 $ 272,828 |
Policy Acquisition Costs (Table
Policy Acquisition Costs (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Policy Acquisition Costs | |
Schedule of policy acquisition costs deferred and amortized | December 31, 2020 2019 2018 (in thousands) Deferred Policy Acquisition Costs: Balance, beginning of year $ 25,201 $ 14,052 $ 15,161 Additions to deferred balance: Direct commissions 82,786 59,676 36,934 Ceding commissions (19,371) (17,257) (15,218) Premium taxes 7,024 5,236 3,362 Total net additions 70,439 47,655 25,078 Amortization of net policy acquisition costs (60,159) (36,506) (26,187) Balance, end of year $ 35,481 $ 25,201 $ 14,052 Acquisition expenses: Amortization of net policy acquisition costs $ 60,159 $ 36,506 $ 26,187 Period costs 3,882 753 2,037 Total Acquisition expenses $ 64,041 $ 37,259 $ 28,224 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Intangible Assets | |
Schedule of intangible assets, indefinite-lived | December 31, 2020 2019 (in thousands) Indefinite-lived intangibles: State insurance licenses $ 744 $ 744 Finite-lived intangibles: Customer relationships 10,768 — Accumulated amortization on finite-lived intangibles — — Total intangible assets $ 11,512 $ 744 |
Schedule of intangible assets, finite-lived | December 31, 2020 2019 (in thousands) Indefinite-lived intangibles: State insurance licenses $ 744 $ 744 Finite-lived intangibles: Customer relationships 10,768 — Accumulated amortization on finite-lived intangibles — — Total intangible assets $ 11,512 $ 744 |
Capitalized Assets (Tables)
Capitalized Assets (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Capitalized Assets | |
Schedule of capitalized assets | Accumulated Net December 31, 2020 Cost Amortization Book Value (in thousands) Capitalized Software $ 8,450 $ (1,767) $ 6,683 Accumulated Net December 31, 2019 Cost Amortization Book Value (in thousands) Capitalized Software $ 4,567 $ (669) $ 3,898 Accumulated Net December 31, 2020 Cost Depreciation Book Value (in thousands) Leasehold improvements $ 879 $ (459) $ 420 Computer hardware 276 (100) 176 Office equipment and furniture 519 (376) 143 Total $ 1,674 $ (935) $ 739 Accumulated Net December 31, 2019 Cost Depreciation Book Value (in thousands) Leasehold improvements $ 879 $ (342) $ 537 Computer hardware 144 (64) 80 Office equipment and furniture 519 (291) 228 Total $ 1,542 $ (697) $ 845 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Leases | |
Schedule of leases | Year ended December 31, 2020 (in thousands) Operating cash outflows from operating leases $ 842 Right of use assets obtained in exchange for new operating lease liabilities — December 31, 2020 ($ in thousands) Operating lease ROU assets $ 2,274 Operating lease liabilities $ 3,012 Weighted-average remaining lease term-operating leases years Weighted-average discount rate-operating leases % |
Schedule of future minimum lease payments - ASC 842 | Years ending December 31, (in thousands) 2021 $ 2022 2023 2024 2025 — Total future minimum lease payments $ 3,123 Less: imputed interest (111) Total operating lease liability $ 3,012 |
Reserve for Losses and Loss A_2
Reserve for Losses and Loss Adjustment Expenses (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Claims Development | |
Schedule of reconciliation of the beginning and ending reserve balances for losses and LAE on a net of reinsurance basis to the gross amounts | Year Ended December 31, 2020 2019 2018 (in thousands) Reserve for losses and loss adjustment expenses net of reinsurance recoverables at beginning of period $ 3,869 $ 4,165 $ 4,432 Add: Incurred losses and loss adjustment expenses, net of reinsurance, related to: Current year 64,179 5,774 8,165 Prior years (64) (181) (1,891) Total incurred 64,115 5,593 6,274 Deduct: Loss and loss adjustment expense payments, net of reinsurance, related to: Current year 31,879 2,179 4,409 Prior years 1,635 3,710 2,132 Total payments 33,514 5,889 6,541 Reserve for losses and loss adjustment expense net of reinsurance recoverables at end of period 34,470 3,869 4,165 Add: Reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period 94,566 12,952 11,896 Reserve for losses and loss adjustment expenses gross of reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period $ 129,036 $ 16,821 $ 16,061 |
Schedule of reconciliation of the net incurred and paid claims development tables to the liability for claims and claim adjustment expenses | 2020 (in thousands) Net outstanding liabilities: Homeowners’ insurance $ 5,693 Special property 24,619 Reinsurance- Nonproportional assumed property(1) 4,110 Other 48 Reserve for losses and loss adjustment expense, net of reinsurance 34,470 Reinsurance recoverable on unpaid claims: Homeowners’ insurance $ 14,640 Special property 79,825 Other 101 Total reinsurance recoverable on unpaid claims 94,566 Total reserve for losses and loss adjustment expenses $ 129,036 |
Homeowners’ Insurance | |
Claims Development | |
Schedule of Incurred and Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance Homeowners’ Insurance (in thousands) As of December 31, 2020 Incurred but Cumulative Year Ended December 31, Not Reported Number of Accident Year 2015(1) 2016(1) 2017(1) 2018(1) 2019 2020 Liabilities Claims 2015 $ 2,048 $ 1,785 $ 1,658 $ 1,636 $ 1,642 $ 1,636 $ — 381 2016 6,069 5,878 5,721 5,636 5,622 — 1,083 2017 9,354 7,418 6,630 6,388 3 2,973 2018 2,193 2,008 1,930 3 789 2019 914 838 98 1,178 2020 19,100 2,995 3,223 Total $ 35,514 $ 3,099 9,627 Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance Homeowners’ Insurance (in thousands) Year Ended December 31, Accident Year 2015(1) 2016(1) 2017(1) 2018(1) 2019 2020 2015 $ 860 $ 1,379 $ 1,523 $ 1,615 $ 1,634 $ 1,636 2016 4,120 5,356 5,585 5,607 5,619 2017 7,135 7,375 6,628 6,371 2018 1,550 1,853 1,922 2019 546 685 2020 13,588 Total $ 29,821 Reserve for losses and loss adjustment expense, net of reinsurance $ 5,693 (1) Data presented for these calendar years is required supplementary information, which is unaudited. |
Schedule of Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance Homeowners’ Insurance | Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Payout percentage 75.69 % 17.95 % 1.19 % 0.66 % 0.69 % 0.12 % |
Special Property Insurance | |
Claims Development | |
Schedule of Incurred and Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance Special Property Insurance (in thousands) As of December 31, 2020 Incurred but Cumulative Year Ended December 31, Not Reported Number of Accident Year 2015(1) 2016(1) 2017(1) 2018(1) 2019 2020 Liabilities Claims 2015 $ 630 $ 719 $ 671 $ 671 $ 678 $ 677 $ — 381 2016 1,381 1,249 1,251 1,454 1,453 — 1,103 2017 3,071 3,475 4,014 4,264 — 3,068 2018 5,970 6,095 6,009 — 949 2019 3,661 3,385 332 1,339 2020 42,334 9,554 1,240 Total $ 58,122 $ 9,886 8,080 Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance Special Property Insurance (in thousands) Year Ended December 31, Accident Year 2015(1) 2016(1) 2017(1) 2018(1) 2019 2020 2015 $ 265 $ 438 $ 586 $ 626 $ 666 $ 673 2016 703 1,064 1,216 1,444 1,453 2017 1,967 3,344 4,011 4,269 2018 2,859 6,036 6,009 2019 1,633 2,825 2020 18,274 Total 33,503 Reserve for losses and loss adjustment expense, net of reinsurance 24,619 (1) Data presented for these calendar years is required supplementary information, which is unaudited. |
Schedule of Average Annual Percentage Payout of Incurred Claims by Age, Net of Reinsurance Homeowners’ Insurance | Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Payout percentage 45.44 % 34.16 % 11.88 % 9.22 % 3.26 % 1.03 % |
Reinsurance (Tables)
Reinsurance (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Reinsurance | |
Schedule of effect of reinsurance on premiums written and earned and on losses and LAE incurred | 2020 2019 2018 Written Earned Written Earned Written Earned (in thousands) Premiums Written and Earned: Direct $ 324,253 $ 271,887 $ 220,568 $ 178,536 $ 144,821 $ 129,071 Assumed 30,107 29,569 31,393 21,985 10,070 8,688 Ceded (155,102) (146,388) (108,332) (100,314) (82,949) (67,862) Net $ 199,258 $ 155,068 $ 143,629 $ 100,207 $ 71,942 $ 69,897 2020 Losses LAE Total (in thousands) Losses and LAE Incurred: Direct $ 145,774 $ 18,777 $ 164,551 Assumed 3,485 159 3,644 Ceded (91,969) (12,111) (104,080) Net $ 57,290 $ 6,825 $ 64,115 2019 Losses LAE Total (in thousands) Losses and LAE Incurred: Direct $ 20,105 $ 2,837 $ 22,942 Assumed 1,201 34 1,235 Ceded (16,564) (2,020) (18,584) Net $ 4,742 $ 851 $ 5,593 2018 Losses LAE Total (in thousands) Losses and LAE Incurred: Direct $ 12,153 $ 2,113 $ 14,266 Assumed 46 6 52 Ceded (6,580) (1,464) (8,044) Net $ 5,619 $ 655 $ 6,274 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Stockholders' Equity | |
Schedule of common stock reserved for future issuance | Stock options outstanding under 2019 Equity Incentive Plan 1,008,648 Restricted stock units outstanding under 2019 Equity Incentive Plan 14,734 Shares authorized for future issuance under 2019 Equity Incentive Plan 1,952,001 Shares authorized for future issuance under 2019 Employee Stock Purchase Plan 451,633 Total 3,427,016 |
Schedule of stock-based compensation expense | Year ended December 31, 2020 2019 2018 (in thousands) Stock-Based Compensation Expense $ 2,167 $ 24,103 $ — |
Schedule of stock option transactions | Weighted average remaining Aggregate Number of Weighted-average contractual term intrinsic value shares exercise price (in years) (in thousands) Outstanding at January 1, 2020 1,046,373 $ 17.05 $ 35,039 Options granted 109,374 80.90 Options exercised (122,613) 16.65 Options canceled (24,486) 21.46 Outstanding at December 31, 2020 1,008,648 $ 23.92 $ 66,028 Vested and Exercisable at December 31, 2020 522,464 $ 15.78 8.29 $ 38,170 |
Schedule of fair value of each option granted was estimated on the grant date using the Black-Scholes option pricing model | Year ended December 31, 2020 2019 2018 (in thousands) Risk free rate of return (1) 0.32% - 1.52% 1.59% - 2.45% — Expected share price volatility (2) 18.13% - 25.67% 18.12% - 18.45% — Expected life in years (3) 5.63-6.08 5.64-6.08 — Dividend yield (4) — (1) Determined based on the U.S. Treasury yield in effect at the time of the grant for zero-coupon U.S. Treasury notes with remaining terms similar to the expected term of the options. (2) Determined based on analysis of the historical volatility of a peer group of publicly traded companies. (3) Determined using the “simplified method” for estimating the expected option life, which is the average of the weighted-average vesting period and contractual term of the option as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time its common stock has been publicly traded. (4) Determined to be zero as the Company does not currently plan to issue dividends. |
Schedule of restricted stock unit transactions | Weighted-average Number of grant date shares fair value Non vested outstanding at January 1, 2020 6,066 $ 16.49 Granted 14,734 95.86 Vested (6,066) 16.49 Forfeited — — Non vested outstanding at December 31, 2020 14,734 $ 95.86 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Accumulated Other Comprehensive Income | |
Schedule of changes in accumulated other comprehensive income (AOCI) | Year Ended December 31, 2020 2019 2018 (in thousands) Balance as of January 1 $ 4,686 $ (563) $ 2,993 Effect of equity accounting guidance adoption — — (3,215) Beginning Balance 4,686 (563) (222) Other comprehensive income (loss) before reclassification 11,292 6,555 (740) Federal income tax (expense) benefit (2,371) (1,344) 76 Other comprehensive income (loss) before reclassification, net of tax 8,921 5,211 (664) Amounts reclassified from AOCI (456) 47 399 Federal income tax expense (benefit) 95 (9) (76) Amounts reclassified from AOCI, net of tax (361) 38 323 Other comprehensive income (loss) 8,560 5,249 (341) Balance at end of period $ 13,246 $ 4,686 $ (563) |
Underwriting Information (Table
Underwriting Information (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Underwriting Information | |
Schedule of gross written premiums | Gross written premiums (“GWP”) by product are presented below: Year Ended December 31, 2020 2019 2018 ($ in thousands) % of % of % of Amount GWP Amount GWP Amount GWP Product Residential Earthquake $ 140,934 39.8 % $ 130,473 51.8 % $ 81,679 % Commercial Earthquake 58,890 16.6 % 38,741 15.4 % 20,946 % Commercial All Risk 53,933 15.2 % 30,358 12.0 % 14,338 % Specialty Homeowners 49,849 14.1 % 32,788 13.0 % 27,680 % Inland Marine 15,423 4.3 % 2,465 1.0 % — — % Hawaii Hurricane 13,824 3.9 % 10,764 4.3 % 8,128 % Residential Flood 8,176 2.3 % 5,216 2.1 % 2,120 % Other 13,331 3.8 % 1,156 0.4 % — — % Total Gross Written Premiums $ 354,360 100.0 % $ 251,961 % $ 154,891 % Gross written premiums by state are as follows: Year Ended December 31, 2020 2019 2018 ($ in thousands) % of % of % of Amount GWP Amount GWP Amount GWP State California $ 172,765 48.8 % $ 141,743 % $ 82,119 % Texas 67,974 19.2 % 44,087 % 32,568 % Hawaii 16,398 4.6 % 11,851 % 8,128 % Washington 14,328 4.0 % 9,607 % 5,658 % North Carolina 11,143 3.1 % 3,894 % 1,568 % Oregon 10,038 2.8 % 7,396 % 5,286 % South Carolina 9,196 2.6 % 6,185 % 3,208 % Mississippi 7,461 2.1 % 4,769 % 2,585 % Other 45,057 12.8 % 22,429 % 13,771 % Total Gross Written Premiums $ 354,360 100.0 % $ 251,961 % $ 154,891 % |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Income Taxes | |
Schedule of federal income tax expense (benefit) | December 31, 2020 2019 2018 (in thousands) Current $ (1,128) $ 6,810 $ (6) Deferred 1,094 646 — Income tax expense (benefit) $ (34) $ 7,456 $ (6) |
Schedule of deferred tax assets and liabilities | December 31, 2020 2019 (in thousands) Deferred tax assets: Losses and LAE reserve discount $ 238 $ 10 Net operating losses 680 74 Investment amortization — 85 Unearned premiums 6,272 3,748 Capitalized organizational costs 244 274 Deferred compensation 511 — Other 652 390 Total deferred tax assets $ 8,597 $ 4,581 Deferred tax liabilities: Deferred acquisition costs $ (7,454) $ (4,468) Unrealized gains on investments (3,884) (1,396) Internally developed software (1,283) (640) Other (672) (2) Total deferred tax liabilities (13,293) (6,506) Net deferred tax liability before valuation allowance (4,696) (1,925) Valuation allowance (680) (74) Total net deferred tax liabilities $ (5,376) $ (1,999) |
Schedule of effective tax rate | Years Ended December 31, 2020 2019 2018 ($ in thousands) Expense computed at federal tax rate $ 1,321 21.00 % $ 3,802 21.00 % $ 3,825 21.00 % Non‑U.S. group member income — — % — — % (4,409) (24.21) % Stock-based compensation (1,538) (24.44) % 4,822 26.63 % — — % Dividend received deduction and tax‑exempt interest (67) (1.06) % (36) (0.20) % (144) (0.79) % Valuation allowance 606 9.63 % (1,677) (9.27) % 678 3.72 % Other (356) (5.67) % 545 3.01 % 44 0.24 % Income tax expense (benefit) $ (34) (0.54) % $ 7,456 41.17 % $ (6) (0.04) % |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Earnings Per Share | |
Schedule of net income per share of common stock | Year ended December 31, 2020 2019 2018 (in thousands, except shares and per share data) Net income $ 6,257 $ 10,621 $ 18,219 Weighted average common shares outstanding: Basic 24,872,251 21,501,541 17,000,000 Common Share equivalents 726,396 333,393 — Diluted 25,598,647 21,834,934 17,000,000 Earnings per share: Basic $ 0.25 $ 0.49 $ 1.07 Diluted $ 0.24 $ 0.49 $ 1.07 |
Statutory financial informati_2
Statutory financial information (Tables) | 12 Months Ended |
Dec. 31, 2020 | |
Statutory financial information | |
Summary of statutory net income and statutory capital surplus | December 31, 2020 2019 2018 (in thousands) Statutory net income (loss) $ 1,753 $ (17,911) $ 9,609 Statutory capital and surplus 213,721 116,296 63,731 |
Summary of Operations and Bas_2
Summary of Operations and Basis of Presentation - Summary of Operations (Details) | 12 Months Ended |
Dec. 31, 2020state | |
Summary of Operations and Basis of Presentation | |
Number states Company underwrites catastrophe insurance on an admitted basis | 32 |
Summary of Operations and Bas_3
Summary of Operations and Basis of Presentation - Stock Split (Details) | Mar. 15, 2019 |
Summary of Operations and Basis of Presentation | |
Forward stock split | 17,000,000 |
Summary of Operations and Bas_4
Summary of Operations and Basis of Presentation - Initial Public Offering (Details) - USD ($) $ / shares in Units, $ in Thousands | Apr. 22, 2019 | Dec. 31, 2019 |
Sale of Stock | ||
Proceeds from initial public offering, net of offering costs | $ 87,411 | |
IPO | ||
Sale of Stock | ||
Issuance of common stock (in shares) | 6,468,750 | |
Share Price | $ 15 | |
Proceeds from initial public offering, net of offering costs | $ 87,400 |
Significant Accounting Polici_3
Significant Accounting Policies - Premiums Receivable (Details) $ in Millions | Jan. 01, 2020USD ($) |
Premiums Receivable | |
Allowance for doubtful accounts | $ 0.2 |
Significant Accounting Polici_4
Significant Accounting Policies - Property and Equipment (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Minimum | |
Property and Equipment | |
Useful life | 3 years |
Maximum | |
Property and Equipment | |
Useful life | 5 years |
Significant Accounting Polici_5
Significant Accounting Policies - Intangible Assets (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Intangible Assets | |||
Impairments of intangible assets | $ 0 | $ 0 | $ 0 |
Significant Accounting Polici_6
Significant Accounting Policies - Impairment of Long-lived Assets (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Impairment of Long-lived Assets | |||
Impairments of long-lived assets | $ 0 | $ 0 | $ 0 |
Significant Accounting Polici_7
Significant Accounting Policies - Recently Adopted Accounting Pronouncements and Recently Issued Accounting Pronouncements Not Yet Adopted (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Accounting Standards Update 2016-02 | |
Recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted | |
Change in Accounting Principle, Accounting Standards Update, Adopted | true |
Change in Accounting Principle, Accounting Standards Update, Adoption Date | Jan. 1, 2020 |
Change in Accounting Principle, Accounting Standards Update, Transition Option Elected | us-gaap:AccountingStandardsUpdate201602CumulativeEffectPeriodOfAdoptionMember |
New Accounting Pronouncement or Change in Accounting Principle, Prior Period Not Restated | true |
Accounting Standards Update 2016-13 | |
Recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted | |
Change in Accounting Principle, Accounting Standards Update, Adopted | true |
Change in Accounting Principle, Accounting Standards Update, Adoption Date | Jan. 1, 2020 |
Accounting Standards Update 2019-12 | |
Recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted | |
Change in Accounting Principle, Accounting Standards Update, Adopted | false |
Significant Accounting Polici_8
Significant Accounting Policies - Recently Adopted Accounting Pronouncements - Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Jan. 01, 2020 | |
Significant Accounting Policies | ||
Lease, Practical Expedient, Use of Hindsight | false | |
Leases | ||
Operating lease, right-of-use asset | $ 2,274 | $ 2,900 |
Operating lease, liability | ||
Operating lease liabilities | $ 3,012 | $ 3,800 |
Significant Accounting Polici_9
Significant Accounting Policies - Recently Adopted Accounting Pronouncements - Measurement of Credit Losses (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted | ||
Retained earnings | $ 39,957 | $ 33,856 |
Accounting Standards Update 2016-13 | Cumulative Effect, Period of Adoption, Adjustment | ||
Recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted | ||
Retained earnings | $ (200) |
Investments - Available for Sal
Investments - Available for Sale Investments (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Available for sale investments | ||
Amortized Cost | $ 381,279 | $ 211,278 |
Gross Unrealized Gains | 17,221 | 5,990 |
Gross Unrealized Losses | (513) | (117) |
Fair Value | 397,987 | 217,151 |
U.S. Governments | ||
Available for sale investments | ||
Amortized Cost | 16,308 | 13,371 |
Gross Unrealized Gains | 756 | 321 |
Gross Unrealized Losses | (5) | (13) |
Fair Value | 17,059 | 13,679 |
States, territories, and possession | ||
Available for sale investments | ||
Amortized Cost | 6,208 | 2,298 |
Gross Unrealized Gains | 428 | 147 |
Fair Value | 6,636 | 2,445 |
Political subdivisions | ||
Available for sale investments | ||
Amortized Cost | 2,027 | 1,913 |
Gross Unrealized Gains | 125 | 29 |
Fair Value | 2,152 | 1,942 |
Special revenue excluding mortgage/asset-backed securities | ||
Available for sale investments | ||
Amortized Cost | 39,704 | 18,139 |
Gross Unrealized Gains | 1,525 | 343 |
Gross Unrealized Losses | (2) | (46) |
Fair Value | 41,227 | 18,436 |
Industrial and miscellaneous | ||
Available for sale investments | ||
Amortized Cost | 234,049 | 124,726 |
Gross Unrealized Gains | 11,602 | 4,326 |
Gross Unrealized Losses | (291) | (39) |
Fair Value | 245,360 | 129,013 |
Mortgage/asset-backed securities | ||
Available for sale investments | ||
Amortized Cost | 82,983 | 50,831 |
Gross Unrealized Gains | 2,785 | 824 |
Gross Unrealized Losses | (215) | (19) |
Fair Value | $ 85,553 | $ 51,636 |
Investments - Security Holdings
Investments - Security Holdings in an Unrealized Loss Position - General Information (Details) $ in Thousands | Dec. 31, 2020USD ($)security | Dec. 31, 2019USD ($)security |
Number of positions: | ||
Number of unrealized loss positions | security | 90 | 51 |
Fair Value | ||
Fair Value | $ 41,525 | $ 20,944 |
Unrealized Losses | ||
Unrealized Losses | $ 513 | $ 117 |
Investments - Security Holdin_2
Investments - Security Holdings in an Unrealized Loss Position - Tabular Disclosure (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Fair Value | ||
Fair Value - Less Than 12 Months | $ 40,826 | $ 18,747 |
Fair Value - More Than 12 Months | 699 | 2,197 |
Fair Value - Total | 41,525 | 20,944 |
Unrealized Losses | ||
Unrealized Losses - Less Than 12 Months | (452) | (114) |
Unrealized Losses - More Than 12 Months | (61) | (3) |
Unrealized Losses - Total | (513) | (117) |
U.S. Governments | ||
Fair Value | ||
Fair Value - Less Than 12 Months | 1,496 | 1,235 |
Fair Value - More Than 12 Months | 1,827 | |
Fair Value - Total | 1,496 | 3,062 |
Unrealized Losses | ||
Unrealized Losses - Less Than 12 Months | (5) | (11) |
Unrealized Losses - More Than 12 Months | (2) | |
Unrealized Losses - Total | (5) | (13) |
Special revenue excluding mortgage/asset-backed securities | ||
Fair Value | ||
Fair Value - Less Than 12 Months | 520 | 3,548 |
Fair Value - Total | 520 | 3,548 |
Unrealized Losses | ||
Unrealized Losses - Less Than 12 Months | (2) | (46) |
Unrealized Losses - Total | (2) | (46) |
Industrial and miscellaneous | ||
Fair Value | ||
Fair Value - Less Than 12 Months | 22,718 | 6,929 |
Fair Value - More Than 12 Months | 203 | 188 |
Fair Value - Total | 22,921 | 7,117 |
Unrealized Losses | ||
Unrealized Losses - Less Than 12 Months | (234) | (38) |
Unrealized Losses - More Than 12 Months | (57) | (1) |
Unrealized Losses - Total | (291) | (39) |
Mortgage/asset-backed securities | ||
Fair Value | ||
Fair Value - Less Than 12 Months | 16,092 | 7,035 |
Fair Value - More Than 12 Months | 496 | 182 |
Fair Value - Total | 16,588 | 7,217 |
Unrealized Losses | ||
Unrealized Losses - Less Than 12 Months | (211) | (19) |
Unrealized Losses - More Than 12 Months | (4) | |
Unrealized Losses - Total | $ (215) | $ (19) |
Investments - Contractual Matur
Investments - Contractual Maturities of Available for Sale Fixed Maturity Securities (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Amortized Cost | ||
Due within one year | $ 11,222 | |
Due after one year through five years | 146,302 | |
Due after five years through ten years | 99,194 | |
Due after ten years | 41,578 | |
Mortgage and asset-backed securities | 82,983 | |
Amortized Cost | 381,279 | $ 211,278 |
Fair Value | ||
Due within one year | 11,351 | |
Due after one year through five years | 151,123 | |
Due after five years through ten years | 106,600 | |
Due after ten years | 43,360 | |
Mortgage and asset-backed securities | 85,553 | |
Total | $ 397,987 | $ 217,151 |
Investments - Change in Unreali
Investments - Change in Unrealized Gains (Losses) of Investments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Debt and Equity Securities, Unrealized Gain (Loss) [Abstract] | |||
Change in net unrealized gains (losses) on fixed maturities | $ 10,835 | $ 6,602 | $ (341) |
Equity securities | 1,039 | 3,009 | (6,036) |
Change in net unrealized gains (losses) | $ 10,835 | $ 6,602 | $ (341) |
Investments - Net Investment In
Investments - Net Investment Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Net investment income | |||
Interest income | $ 8,554 | $ 5,894 | $ 3,036 |
Dividend income | 489 | 424 | 514 |
Less: investment expense | (431) | (343) | (312) |
Net investment income | $ 8,612 | $ 5,975 | $ 3,238 |
Investments - Net Realized and
Investments - Net Realized and Unrealized Investment Gains and Losses (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Net realized and unrealized investment gains and losses | |||
Gains on sales of fixed maturity securities | $ 501 | $ 1,405 | $ 19 |
Gains on sales of equity securities | 62 | 177 | 4,287 |
Total realized gains | 563 | 1,582 | 4,306 |
Losses on sales of fixed maturity securities | (46) | (84) | (418) |
Losses on sales of equity securities | (68) | (64) | (421) |
Total realized losses | (114) | (148) | (839) |
Net realized investment gains | 449 | 1,434 | 3,467 |
Net unrealized gains (losses) on equity securities | 1,039 | 3,009 | (6,036) |
Net realized and unrealized gains on investments | 1,488 | 4,443 | (2,569) |
Proceeds from sales of fixed maturity securities | |||
Proceeds from the sale of fixed maturity securities | $ 39,800 | $ 46,300 | $ 48,500 |
Investments - Securities on Dep
Investments - Securities on Deposit (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Investments | ||
Fair Value | $ 397,987 | $ 217,151 |
Securities on deposit with state regulatory authorities | ||
Investments | ||
Fair Value | $ 7,500 | $ 5,100 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Assets: | ||
Fair Value | $ 397,987 | $ 217,151 |
Equity securities at fair value | 24,322 | 22,328 |
U.S. Governments | ||
Assets: | ||
Fair Value | 17,059 | 13,679 |
States, territories, and possession | ||
Assets: | ||
Fair Value | 6,636 | 2,445 |
Political subdivisions | ||
Assets: | ||
Fair Value | 2,152 | 1,942 |
Special revenue excluding mortgage/asset-backed securities | ||
Assets: | ||
Fair Value | 41,227 | 18,436 |
Industrial and miscellaneous | ||
Assets: | ||
Fair Value | 245,360 | 129,013 |
Mortgage/asset-backed securities | ||
Assets: | ||
Fair Value | 85,553 | 51,636 |
Fair Value, Measurements, Recurring | ||
Assets: | ||
Equity securities at fair value | 24,322 | 22,328 |
Cash, cash equivalents, and restricted cash | 33,786 | 33,349 |
Total assets | 456,095 | 272,828 |
Fair Value, Measurements, Recurring | U.S. Governments | ||
Assets: | ||
Fair Value | 17,059 | 13,679 |
Fair Value, Measurements, Recurring | States, territories, and possession | ||
Assets: | ||
Fair Value | 6,636 | 2,445 |
Fair Value, Measurements, Recurring | Political subdivisions | ||
Assets: | ||
Fair Value | 2,152 | 1,942 |
Fair Value, Measurements, Recurring | Special revenue excluding mortgage/asset-backed securities | ||
Assets: | ||
Fair Value | 41,227 | 18,436 |
Fair Value, Measurements, Recurring | Industrial and miscellaneous | ||
Assets: | ||
Fair Value | 245,360 | 129,013 |
Fair Value, Measurements, Recurring | Mortgage/asset-backed securities | ||
Assets: | ||
Fair Value | 85,553 | 51,636 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | ||
Assets: | ||
Equity securities at fair value | 24,322 | 22,328 |
Cash, cash equivalents, and restricted cash | 33,786 | 28,350 |
Total assets | 58,108 | 50,678 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | ||
Assets: | ||
Cash, cash equivalents, and restricted cash | 4,999 | |
Total assets | 397,987 | 220,650 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | U.S. Governments | ||
Assets: | ||
Fair Value | 17,059 | 13,679 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | States, territories, and possession | ||
Assets: | ||
Fair Value | 6,636 | 2,445 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Political subdivisions | ||
Assets: | ||
Fair Value | 2,152 | 1,942 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Special revenue excluding mortgage/asset-backed securities | ||
Assets: | ||
Fair Value | 41,227 | 18,436 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Industrial and miscellaneous | ||
Assets: | ||
Fair Value | 245,360 | 129,013 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Mortgage/asset-backed securities | ||
Assets: | ||
Fair Value | $ 85,553 | 50,136 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | ||
Assets: | ||
Total assets | 1,500 | |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 3 | Mortgage/asset-backed securities | ||
Assets: | ||
Fair Value | $ 1,500 |
Fair Value Measurements - Trans
Fair Value Measurements - Transfers (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Fair Value Measurements | |
Fair value, assets, transfers out of Level 3 | $ 1.5 |
Policy Acquisition Costs (Detai
Policy Acquisition Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Deferred Policy Acquisition Costs: | |||
Balance, beginning of year | $ 25,201 | $ 14,052 | $ 15,161 |
Direct commissions | 82,786 | 59,676 | 36,934 |
Ceding commissions | (19,371) | (17,257) | (15,218) |
Premium taxes | 7,024 | 5,236 | 3,362 |
Total net additions | 70,439 | 47,655 | 25,078 |
Amortization of net policy acquisition costs | (60,159) | (36,506) | (26,187) |
Balance, end of year | 35,481 | 25,201 | 14,052 |
Acquisition expenses: | |||
Amortization of net policy acquisition costs | 60,159 | 36,506 | 26,187 |
Period costs | 3,882 | 753 | 2,037 |
Total Acquisition expenses | $ 64,041 | $ 37,259 | $ 28,224 |
Intangible Assets - Tabular Dis
Intangible Assets - Tabular Disclosure (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Indefinite-lived intangibles: | ||
State insurance licenses | $ 744 | $ 744 |
Finite-lived intangibles: | ||
Customer relationships | 10,768 | |
Total intangible assets | $ 11,512 | $ 744 |
Intangible Assets - Useful Live
Intangible Assets - Useful Lives (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Customer Relationships | |
Finite-lived intangibles: | |
Finite-lived intangible asset, useful life | 8 years |
Capitalized Assets - Capitalize
Capitalized Assets - Capitalized Software - Tabular Disclosure (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Capitalized software | ||
Cost | $ 8,450 | $ 4,567 |
Accumulated Amortization | (1,767) | (669) |
Net Book Value | $ 6,683 | $ 3,898 |
Capitalized Assets - Capitali_2
Capitalized Assets - Capitalized Software - Amortization Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Capitalized Assets | |||
Amortization expense relating to capitalized software | $ 1,100 | $ 600 | $ 30 |
Capitalized Assets - Property a
Capitalized Assets - Property and Equipment - Tabular Disclosure (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Property and Equipment | ||
Cost | $ 1,674 | $ 1,542 |
Accumulated Depreciation | (935) | (697) |
Net Book Value | 739 | 845 |
Leasehold improvements | ||
Property and Equipment | ||
Cost | 879 | 879 |
Accumulated Depreciation | (459) | (342) |
Net Book Value | 420 | 537 |
Computer hardware | ||
Property and Equipment | ||
Cost | 276 | 144 |
Accumulated Depreciation | (100) | (64) |
Net Book Value | 176 | 80 |
Office equipment and furniture | ||
Property and Equipment | ||
Cost | 519 | 519 |
Accumulated Depreciation | (376) | (291) |
Net Book Value | $ 143 | $ 228 |
Capitalized Assets - Property_2
Capitalized Assets - Property and Equipment - Amortization Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Property and Equipment | |||
Depreciation | $ 0.2 | $ 0.2 | $ 0.2 |
Leases - Lease Cost (Details)
Leases - Lease Cost (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Lease, cost | |||
Operating lease costs | $ 0.7 | $ 0.6 | $ 0.6 |
Leases - Additional Information
Leases - Additional Information (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Leases | |
Operating cash outflows from operating leases | $ 842 |
Right of use assets obtained in exchange for new operating lease liabilities | $ 0 |
Leases - Assets and Liabilities
Leases - Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Jan. 01, 2020 |
Assets and liabilities | ||
Operating lease ROU assets | $ 2,274 | $ 2,900 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position | us-gaap:PrepaidExpenseAndOtherAssets | us-gaap:PrepaidExpenseAndOtherAssets |
Operating lease, liability | ||
Operating lease liabilities | $ 3,012 | $ 3,800 |
Operating Lease, Liability, Statement of Financial Position | us-gaap:AccountsPayableAndOtherAccruedLiabilities | us-gaap:AccountsPayableAndOtherAccruedLiabilities |
Leases - Weighted-average Discl
Leases - Weighted-average Disclosures (Details) | Dec. 31, 2020 |
Leases | |
Weighted-average remaining lease term-operating leases | 3 years 6 months |
Weighted-average discount rate-operating leases (as a percent) | 2.10% |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments (Details) $ in Thousands | Dec. 31, 2020USD ($) |
Future minimum lease payments | |
2021 | $ 879 |
2022 | 904 |
2023 | 862 |
2024 | 478 |
Total future minimum lease payments | $ 3,123 |
Leases - Gross Difference (Deta
Leases - Gross Difference (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Jan. 01, 2020 |
Leases | ||
Total future minimum lease payments | $ 3,123 | |
Less: imputed interest | (111) | |
Total operating lease liability | $ 3,012 | $ 3,800 |
Reserve for Losses and Loss A_3
Reserve for Losses and Loss Adjustment Expenses - Roll Forward (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Reserve for Losses and Loss Adjustment Expenses | |||
Reserve for losses and loss adjustment expenses net of reinsurance recoverables at beginning of period | $ 3,869 | $ 4,165 | $ 4,432 |
Add: Incurred losses and loss adjustment expenses, net of reinsurance, related to: | |||
Current year | 64,179 | 5,774 | 8,165 |
Prior years | (64) | (181) | (1,891) |
Total incurred | 64,115 | 5,593 | 6,274 |
Deduct: Loss and loss adjustment expense payments, net of reinsurance, related to: | |||
Current year | 31,879 | 2,179 | 4,409 |
Prior years | 1,635 | 3,710 | 2,132 |
Total payments | 33,514 | 5,889 | 6,541 |
Reserve for losses and loss adjustment expense net of reinsurance recoverables at end of period | $ 34,470 | $ 3,869 | $ 4,165 |
Reserve for Losses and Loss A_4
Reserve for Losses and Loss Adjustment Expenses - Total (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Reserve for Losses and Loss Adjustment Expenses | ||||
Total reserve for losses and loss adjustment expenses | $ 34,470 | $ 3,869 | $ 4,165 | $ 4,432 |
Add: Reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period | 94,566 | 12,952 | 11,896 | |
Reserve for losses and loss adjustment expenses gross of reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period | $ 129,036 | $ 16,821 | $ 16,061 |
Reserve for Losses and Loss A_5
Reserve for Losses and Loss Adjustment Expenses - Adverse (Favorable) Development (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Adverse (Favorable) Development | |||
Adverse (favorable) development | $ (64) | $ (181) | $ (1,891) |
Reserve for Losses and Loss A_6
Reserve for Losses and Loss Adjustment Expenses - Additional Information (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Reserve for Losses and Loss Adjustment Expenses | |||
Loss and loss adjustment expense reserve redundancy | $ 0.1 | $ 0.2 | $ 1.9 |
Reserve for Losses and Loss A_7
Reserve for Losses and Loss Adjustment Expenses - Incurred and Paid Accident Year Claims Development (Details) $ in Thousands | Dec. 31, 2020USD ($)claim | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Homeowners’ Insurance | ||||||
Claims Development | ||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 35,514 | |||||
Incurred but Not Reported Liabilities | $ 3,099 | |||||
Cumulative Number of Claims | 9,627 | |||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 29,821 | |||||
Reserve for losses and loss adjustment expense, net of reinsurance | 5,693 | |||||
Homeowners’ Insurance | 2015 | ||||||
Claims Development | ||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 1,636 | $ 1,642 | $ 1,636 | $ 1,658 | $ 1,785 | $ 2,048 |
Cumulative Number of Claims | claim | 381 | |||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 1,636 | 1,634 | 1,615 | 1,523 | 1,379 | 860 |
Homeowners’ Insurance | 2016 | ||||||
Claims Development | ||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 5,622 | 5,636 | 5,721 | 5,878 | 6,069 | |
Cumulative Number of Claims | 1,083 | |||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 5,619 | 5,607 | 5,585 | 5,356 | 4,120 | |
Homeowners’ Insurance | 2017 | ||||||
Claims Development | ||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 6,388 | 6,630 | 7,418 | 9,354 | ||
Incurred but Not Reported Liabilities | $ 3 | |||||
Cumulative Number of Claims | 2,973 | |||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 6,371 | 6,628 | 7,375 | 7,135 | ||
Homeowners’ Insurance | 2018 | ||||||
Claims Development | ||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 1,930 | 2,008 | 2,193 | |||
Incurred but Not Reported Liabilities | $ 3 | |||||
Cumulative Number of Claims | 789 | |||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 1,922 | 1,853 | 1,550 | |||
Homeowners’ Insurance | 2019 | ||||||
Claims Development | ||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 838 | 914 | ||||
Incurred but Not Reported Liabilities | $ 98 | |||||
Cumulative Number of Claims | 1,178 | |||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 685 | 546 | ||||
Homeowners’ Insurance | 2020 | ||||||
Claims Development | ||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 19,100 | |||||
Incurred but Not Reported Liabilities | $ 2,995 | |||||
Cumulative Number of Claims | 3,223 | |||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 13,588 | |||||
Special Property Insurance | ||||||
Claims Development | ||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 58,122 | |||||
Incurred but Not Reported Liabilities | $ 9,886 | |||||
Cumulative Number of Claims | 8,080 | |||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 33,503 | |||||
Reserve for losses and loss adjustment expense, net of reinsurance | 24,619 | |||||
Special Property Insurance | 2015 | ||||||
Claims Development | ||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 677 | 678 | 671 | 671 | 719 | 630 |
Cumulative Number of Claims | claim | 381 | |||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 673 | 666 | 626 | 586 | 438 | $ 265 |
Special Property Insurance | 2016 | ||||||
Claims Development | ||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 1,453 | 1,454 | 1,251 | 1,249 | 1,381 | |
Cumulative Number of Claims | 1,103 | |||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 1,453 | 1,444 | 1,216 | 1,064 | $ 703 | |
Special Property Insurance | 2017 | ||||||
Claims Development | ||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 4,264 | 4,014 | 3,475 | 3,071 | ||
Cumulative Number of Claims | 3,068 | |||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 4,269 | 4,011 | 3,344 | $ 1,967 | ||
Special Property Insurance | 2018 | ||||||
Claims Development | ||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 6,009 | 6,095 | 5,970 | |||
Cumulative Number of Claims | 949 | |||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 6,009 | 6,036 | $ 2,859 | |||
Special Property Insurance | 2019 | ||||||
Claims Development | ||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 3,385 | 3,661 | ||||
Incurred but Not Reported Liabilities | $ 332 | |||||
Cumulative Number of Claims | 1,339 | |||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 2,825 | $ 1,633 | ||||
Special Property Insurance | 2020 | ||||||
Claims Development | ||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 42,334 | |||||
Incurred but Not Reported Liabilities | $ 9,554 | |||||
Cumulative Number of Claims | claim | 1,240 | |||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 18,274 |
Reserve for Losses and Loss A_8
Reserve for Losses and Loss Adjustment Expenses - Average Annual Percentage Payout of Incurred Claims by Age (Details) | Dec. 31, 2020 |
Homeowners’ Insurance | |
Short-duration Insurance Contracts, Historical Claims Duration | |
Year 1 | 75.69% |
Year 2 | 17.95% |
Year 3 | 1.19% |
Year 4 | 0.66% |
Year 5 | 0.69% |
Year 6 | 0.12% |
Special Property Insurance | |
Short-duration Insurance Contracts, Historical Claims Duration | |
Year 1 | 45.44% |
Year 2 | 34.16% |
Year 3 | 11.88% |
Year 4 | 9.22% |
Year 5 | 3.26% |
Year 6 | 1.03% |
Reserve for Losses and Loss A_9
Reserve for Losses and Loss Adjustment Expenses - Reconciliation of Liability for Claims and Claim Adjustment Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Short-duration Insurance Contracts, Historical Claims Duration | ||||
Reserve for losses and loss adjustment expense net of reinsurance | $ 34,470 | $ 3,869 | $ 4,165 | $ 4,432 |
Reinsurance recoverable on unpaid losses and loss adjustment expenses | 94,566 | 12,952 | 11,896 | |
Reserve for losses and loss adjustment expenses | 129,036 | $ 16,821 | $ 16,061 | |
Homeowners’ Insurance | ||||
Short-duration Insurance Contracts, Historical Claims Duration | ||||
Reserve for losses and loss adjustment expense net of reinsurance | 5,693 | |||
Reinsurance recoverable on unpaid losses and loss adjustment expenses | 14,640 | |||
Special Property Insurance | ||||
Short-duration Insurance Contracts, Historical Claims Duration | ||||
Reserve for losses and loss adjustment expense net of reinsurance | 24,619 | |||
Reinsurance recoverable on unpaid losses and loss adjustment expenses | 79,825 | |||
Reinsurance- Nonproportional assumed property | ||||
Short-duration Insurance Contracts, Historical Claims Duration | ||||
Reserve for losses and loss adjustment expense net of reinsurance | 4,110 | |||
Other | ||||
Short-duration Insurance Contracts, Historical Claims Duration | ||||
Reserve for losses and loss adjustment expense net of reinsurance | 48 | |||
Reinsurance recoverable on unpaid losses and loss adjustment expenses | $ 101 |
Reinsurance - General Informati
Reinsurance - General Information (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Nov. 30, 2020USD ($) | Jun. 30, 2017USD ($) | Dec. 31, 2020USD ($)Counterparty | Dec. 31, 2019USD ($)Counterparty | Dec. 31, 2018USD ($)Counterparty | |
Reinsurance Retention Policy | |||||
Retention amount | $ 4,500 | $ 1,700 | |||
Ceded written premiums | 155,102 | 108,332 | $ 82,949 | ||
Ceded unearned premiums | $ 35,031 | $ 26,105 | |||
Number of Company’s largest reinsurers | Counterparty | 3 | 3 | 3 | ||
Reinsurance premiums ceded | $ 146,388 | $ 100,314 | $ 67,862 | ||
Percentage of reinsurance premiums ceded on total premium | 22.40% | 31.50% | 24.00% | ||
Percentage of reinsurance recoverable on paid and unpaid losses on total balance | 42.80% | 38.20% | |||
Catastrophe | |||||
Reinsurance Retention Policy | |||||
Retention amount | $ 10,000 | ||||
XOL reinsurance, protection | 600,000 | ||||
Hurricane and Earthquake Events [Member] | Minimum | |||||
Reinsurance Retention Policy | |||||
Retention amount | 5,000 | ||||
Hurricane and Earthquake Events [Member] | Maximum | |||||
Reinsurance Retention Policy | |||||
Retention amount | 15,000 | ||||
Earthquake events | |||||
Reinsurance Retention Policy | |||||
XOL reinsurance, protection | 1,400,000 | ||||
Veritcal Coparticipation of Selected Layer [Member] | |||||
Reinsurance Retention Policy | |||||
Retention amount | 1,000 | ||||
Texas Homeowners | |||||
Reinsurance Retention Policy | |||||
Ceded written premiums | 14,600 | $ 20,400 | |||
Ceded unearned premiums | $ 24,900 | ||||
Torrey Pines Re Ltd. (“TPRe”) | Catastrophe | |||||
Reinsurance Retention Policy | |||||
Notes issued for reinsurance coverage | $ 166,000 | ||||
Reinsurance premiums ceded | 5,000 | ||||
First largest insurer | |||||
Reinsurance Retention Policy | |||||
Reinsurance premiums ceded | 9,700 | 21,700 | 7,500 | ||
Reinsurance recoverables on paid and unpaid losses | 36,000 | 2,700 | |||
Second largest insurer | |||||
Reinsurance Retention Policy | |||||
Reinsurance premiums ceded | 8,600 | 7,500 | 7,200 | ||
Reinsurance recoverables on paid and unpaid losses | 5,800 | 1,900 | |||
Third largest insurer | |||||
Reinsurance Retention Policy | |||||
Reinsurance premiums ceded | 6,000 | 4,900 | 5,200 | ||
Reinsurance recoverables on paid and unpaid losses | 3,100 | 1,900 | |||
Commercial All Risk | |||||
Reinsurance Retention Policy | |||||
Ceded written premiums | $ 19,000 | $ 7,200 | |||
Ceded unearned premiums | $ 19,200 | ||||
Commercial Earthquake Premiums | |||||
Reinsurance Retention Policy | |||||
Ceded written premiums | $ 7,100 |
Reinsurance - Effect of Reinsur
Reinsurance - Effect of Reinsurance (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Premiums Written: | |||
Direct | $ 324,253 | $ 220,568 | $ 144,821 |
Assumed | 30,107 | 31,393 | 10,070 |
Ceded | (155,102) | (108,332) | (82,949) |
Net written premiums | 199,258 | 143,629 | 71,942 |
Premiums Earned: | |||
Direct | 271,887 | 178,536 | 129,071 |
Assumed | 29,569 | 21,985 | 8,688 |
Ceded | (146,388) | (100,314) | (67,862) |
Net earned premiums | 155,068 | 100,207 | 69,897 |
Losses Incurred: | |||
Direct | 145,774 | 20,105 | 12,153 |
Assumed | 3,485 | 1,201 | 46 |
Ceded | (91,969) | (16,564) | (6,580) |
Net losses incurred | 57,290 | 4,742 | 5,619 |
LAE Incurred: | |||
Direct | 18,777 | 2,837 | 2,113 |
Assumed | 159 | 34 | 6 |
Ceded | (12,111) | (2,020) | (1,464) |
Total LAE incurred | 6,825 | 851 | 655 |
Total losses and LAE incurred: | |||
Direct | 164,551 | 22,942 | 14,266 |
Assumed | 3,644 | 1,235 | 52 |
Ceded | (104,080) | (18,584) | (8,044) |
Net total | $ 64,115 | $ 5,593 | $ 6,274 |
Long-term Debt - Surplus Notes
Long-term Debt - Surplus Notes (Details) - USD ($) $ in Millions | Feb. 03, 2015 | Sep. 30, 2018 | Aug. 31, 2018 |
Notes Payable, Other Payables | Surplus Notes | |||
Long-term debt | |||
Outstanding surplus notes | $ 17.5 | ||
Term | 7 years | ||
Pay down of surplus notes | $ 17.5 | ||
Pre-payment, penalty | 0.1 | ||
Unamortized debt issuance costs | 0.4 | ||
Notes Payable, Other Payables | Surplus Notes | London Interbank Offered Rate (LIBOR) | |||
Long-term debt | |||
Interest rate spread (as a percent) | 8.00% | ||
Senior Notes | 2018 Floating Rate Notes | |||
Long-term debt | |||
Debt instrument, face amount | $ 20 |
Long-term Debt - Floating Rate
Long-term Debt - Floating Rate Notes (Details) - USD ($) $ in Millions | May 23, 2019 | Sep. 30, 2018 | Dec. 31, 2019 |
Three-month Treasury Rate | |||
Long-term debt | |||
Interest rate spread (as a percent) | 6.50% | ||
Senior Notes | 2018 Floating Rate Notes | |||
Long-term debt | |||
Debt instrument, redemption price, percentage (as a percent) | 102.00% | ||
Redemption price | $ 20.4 | ||
Accrued interest and unpaid interest | 0.3 | ||
Redemption charge | 1.3 | ||
Redemption Premium | 0.4 | $ 0.4 | |
Write-off of unamortized debt issuance costs | 0.9 | ||
Senior Notes | 2018 Floating Rate Notes | Interest Expense. | |||
Long-term debt | |||
Redemption Premium | 0.4 | ||
Senior Notes | 2018 Floating Rate Notes | Other Underwriting Expense | |||
Long-term debt | |||
Redemption Premium | $ 0.9 |
Long-term Debt - Interest (Deta
Long-term Debt - Interest (Details) - USD ($) $ in Millions | May 23, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Senior Notes | 2018 Floating Rate Notes | |||
Long-term debt | |||
Interest expense | $ 1.1 | $ 0.6 | |
Redemption Premium | $ 0.4 | 0.4 | |
Interest paid | $ 1.2 | 0.5 | |
Notes Payable, Other Payables | Surplus Notes | |||
Long-term debt | |||
Interest expense | 1.2 | ||
Interest paid | $ 1.2 |
Stockholders' Equity - Shares I
Stockholders' Equity - Shares Issued and Outstanding (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Preferred stock | ||
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock | ||
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 25,525,796 | 23,468,750 |
Common stock, shares outstanding (in shares) | 25,525,796 | 23,468,750 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Additional paid-in capital | ||
Additional paid-in capital | $ 310,507 | $ 180,012 |
Stockholders' Equity - Cash Dis
Stockholders' Equity - Cash Distribution (Details) $ in Millions | 1 Months Ended |
Mar. 31, 2019USD ($) | |
Stockholders' Equity | |
One-time cash distribution | $ 5.1 |
Stockholders' Equity - Stock Of
Stockholders' Equity - Stock Offerings (Details) - USD ($) $ / shares in Units, $ in Thousands | Jun. 26, 2020 | Jan. 09, 2020 | Apr. 22, 2019 | Dec. 31, 2019 |
Sale of Stock | ||||
Proceeds from initial public offering, net of offering costs | $ 87,411 | |||
IPO | ||||
Sale of Stock | ||||
Issuance of common stock (in shares) | 6,468,750 | |||
Share price (in dollars per share) | $ 15 | |||
Proceeds from initial public offering, net of offering costs | $ 87,400 | |||
Secondary Offering | ||||
Sale of Stock | ||||
Issuance of common stock (in shares) | 750,000 | |||
Share price (in dollars per share) | $ 49 | |||
Net proceeds | $ 35,500 | |||
Selling stockholders | ||||
Sale of Stock | ||||
Issuance of common stock (in shares) | 5,000,000 | |||
Underwriter Option | ||||
Sale of Stock | ||||
Issuance of common stock (in shares) | 1,150,000 | 843,750 | ||
Share price (in dollars per share) | $ 82 | |||
Net proceeds | $ 90,100 |
Stockholders' Equity - Reserved
Stockholders' Equity - Reserved for Future Issuance (Details) - shares | Dec. 31, 2020 | Dec. 31, 2019 | Apr. 16, 2019 |
Common stock reserved for future issuance | |||
Stock options outstanding (in shares) | 1,008,648 | 1,046,373 | |
Total (in shares) | 3,427,016 | ||
2019 Equity Incentive Plan | |||
Common stock reserved for future issuance | |||
Stock options outstanding (in shares) | 1,008,648 | ||
Shares authorized for future issuance (in shares) | 1,952,001 | 2,400,000 | |
2019 Employee Stock Purchase Plan | |||
Common stock reserved for future issuance | |||
Shares authorized for future issuance (in shares) | 451,633 | ||
Restricted Stock Units | |||
Common stock reserved for future issuance | |||
Restricted stock units outstanding (in shares) | 14,734 | 6,066 | |
Restricted Stock Units | 2019 Equity Incentive Plan | |||
Common stock reserved for future issuance | |||
Restricted stock units outstanding (in shares) | 14,734 |
Stockholders' Equity - Stock-ba
Stockholders' Equity - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Stock-based compensation expense | ||||
Stock-Based Compensation Expense | $ 2,167 | $ 24,103 | $ 0 | |
2014 Management Incentive Plan | ||||
Stock-based compensation expense | ||||
Stock-Based Compensation Expense | $ 23,000 |
Stockholders' Equity - Manageme
Stockholders' Equity - Management Incentive Plan Prior to IPO (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Mar. 15, 2019 | |
Stock-Based Compensation | ||||||
Stock-based compensation | $ 2,167 | $ 24,103 | $ 0 | |||
Increase in additional paid in capital | $ 2,167 | $ 24,103 | ||||
2014 Management Incentive Plan | ||||||
Stock-Based Compensation | ||||||
Units outstanding (in shares) | 12,552,825 | |||||
Stock-based compensation | $ 23,000 | |||||
Increase in additional paid in capital | $ 23,000 |
Stockholders' Equity - 2019 Equ
Stockholders' Equity - 2019 Equity Incentive Plan (Details) - 2019 Equity Incentive Plan - shares | Dec. 31, 2020 | Apr. 16, 2019 |
Stock-Based Compensation | ||
Shares authorized (in shares) | 1,952,001 | 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 - Vesting
Stockholders' Equity - Vesting (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Stock Options | |
Stock-Based Compensation | |
Expiry period | 10 years |
Stock Options | Share-based Payment Arrangement, Tranche One | |
Stock-Based Compensation | |
Vesting period | 2 years |
Stock Options | Share-based Payment Arrangement, Tranche One, First Anniversary | |
Stock-Based Compensation | |
Vesting period | 1 year |
Stock Options | Share-based Payment Arrangement, Tranche One, First Anniversary | Minimum | |
Stock-Based Compensation | |
Vesting percentage (as a percent) | 25.00% |
Stock Options | Share-based Payment Arrangement, Tranche One, First Anniversary | Maximum | |
Stock-Based Compensation | |
Vesting percentage (as a percent) | 50.00% |
Stock Options | Share-based Payment Arrangement, Tranche Two | |
Stock-Based Compensation | |
Vesting period | 4 years |
Stock Options | Share-based Payment Arrangement, Tranche Two, First Anniversary | |
Stock-Based Compensation | |
Vesting period | 1 year |
Stock Options | Share-based Payment Arrangement, Tranche Two, First Anniversary | Minimum | |
Stock-Based Compensation | |
Vesting percentage (as a percent) | 25.00% |
Stock Options | Share-based Payment Arrangement, Tranche Two, First Anniversary | Maximum | |
Stock-Based Compensation | |
Vesting percentage (as a percent) | 50.00% |
Restricted Stock Units | Share-based Payment Arrangement, Tranche One | |
Stock-Based Compensation | |
Vesting period | 1 year |
Vesting percentage (as a percent) | 100.00% |
Restricted Stock Units | Share-based Payment Arrangement, Tranche Two | |
Stock-Based Compensation | |
Vesting period | 3 years |
Restricted Stock Units | Share-based Payment Arrangement, Tranche Two, First Anniversary | |
Stock-Based Compensation | |
Vesting percentage (as a percent) | 33.33% |
Restricted Stock Units | Share-based Payment Arrangement, Tranche Two, Second Anniversary | |
Stock-Based Compensation | |
Vesting period | 1 year |
Vesting percentage (as a percent) | 33.33% |
Restricted Stock Units | Share-based Payment Arrangement, Tranche Two, Third Anniversary | |
Stock-Based Compensation | |
Vesting period | 1 year |
Vesting percentage (as a percent) | 33.33% |
Stockholders' Equity - Stock Op
Stockholders' Equity - Stock Options - Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Number of shares | ||
Outstanding at beginning of period (in shares) | 1,046,373 | |
Granted (in shares) | 109,374 | |
Exercised (in shares) | (122,613) | |
Canceled (in shares) | (24,486) | |
Outstanding at end of period (in shares) | 1,008,648 | 1,046,373 |
Weighted-average exercise price | ||
Outstanding at beginning of period (in dollars per share) | $ 17.05 | |
Granted (in dollars per share) | 80.90 | |
Exercised (in dollars per share) | 16.65 | |
Canceled (in dollars per share) | 21.46 | |
Outstanding at end of period (in dollars per share) | $ 23.92 | $ 17.05 |
Additional disclosures | ||
Weighted average remaining contractual term | 8 years 5 months 5 days | 9 years 3 months 29 days |
Aggregate intrinsic value | $ 66,028 | $ 35,039 |
Vested and Exercisable | ||
Vested and expected to vest, exercisable, number (in shares) | 522,464 | |
Vested and expected to vest, exercisable, weighted average exercise price (in dollars per share) | $ 15.78 | |
Vested and expected to vest, exercisable, weighted average remaining contractual term | 8 years 3 months 15 days | |
Vested and expected to vest, exercisable, aggregate intrinsic value | $ 38,170 |
Stockholders' Equity - Unrecogn
Stockholders' Equity - Unrecognized Compensation Expense (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2020USD ($) | |
Unrecognized stock-based compensation expense | |
Total intrinsic value of stock options exercised | $ 7.7 |
Total unrecognized stock-based compensation expense, options | $ 3.7 |
Stock Options | |
Unrecognized stock-based compensation expense | |
Weighted-average period over which unrecognized stock-based compensation expense is expected to be recognized | 2 years 3 months 7 days |
Restricted Stock Units | |
Unrecognized stock-based compensation expense | |
Total unrecognized stock-based compensation expense, restricted stock units | $ 1.2 |
Weighted-average period over which unrecognized stock-based compensation expense is expected to be recognized | 2 years 4 months 28 days |
Stockholders' Equity - Stock _2
Stockholders' Equity - Stock Options - Fair Value Assumptions (Details) - Stock Options | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Fair value assumptions | ||
Risk free rate of return, minimum (as a percent) | 0.32% | 1.59% |
Risk free rate of return, maximum (as a percent) | 1.52% | 2.45% |
Expected share price volatility, minimum (as a percent) | 18.13% | 18.12% |
Expected share price volatility, maximum (as a percent) | 25.67% | 18.45% |
Dividend yield (as a percent) | 0.00% | 0.00% |
Minimum | ||
Fair value assumptions | ||
Expected life in years | 5 years 7 months 17 days | 5 years 7 months 21 days |
Maximum | ||
Fair value assumptions | ||
Expected life in years | 6 years 29 days | 6 years 29 days |
Stockholders' Equity - Restrict
Stockholders' Equity - Restricted Stock Units (Details) - Restricted Stock Units | 12 Months Ended |
Dec. 31, 2020$ / sharesshares | |
Number of shares | |
Non vested outstanding at beginning of period (in shares) | shares | 6,066 |
Granted (in shares) | shares | 14,734 |
Vested (in shares) | shares | (6,066) |
Non vested at end of period (in shares) | shares | 14,734 |
Weighted-average grant date fair value | |
Non vested outstanding at beginning of period (in dollars per share) | $ / shares | $ 16.49 |
Granted (in dollars per share) | $ / shares | 95.86 |
Vested (in dollars per share) | $ / shares | 16.49 |
Non vested outstanding at end of period (in dollars per share) | $ / shares | $ 95.86 |
Stockholders' Equity - 2019 Emp
Stockholders' Equity - 2019 Employee Stock Purchase Plan (Details) - shares | 12 Months Ended | |
Dec. 31, 2020 | Apr. 16, 2019 | |
Stock-Based Compensation | ||
Issuance of common stock via employee stock purchase plan (in shares) | 28,367 | |
Employee Stock | ||
Stock-Based Compensation | ||
Shares authorized (in shares) | 240,000 | |
Annual increase (in shares) | 240,000 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Changes in accumulated other comprehensive income | |||
Beginning balance | $ 218,556 | $ 96,292 | $ 78,414 |
Other comprehensive income (loss) | 8,560 | 5,249 | (341) |
Ending balance | 363,713 | 218,556 | 96,292 |
Cumulative Effect, Period of Adoption, Adjustment | |||
Changes in accumulated other comprehensive income | |||
Beginning balance | (156) | ||
Ending balance | (156) | ||
Accumulated Other Comprehensive Income (Loss) | |||
Changes in accumulated other comprehensive income | |||
Beginning balance | 4,686 | (563) | 2,993 |
Other comprehensive income (loss) before reclassification | 11,292 | 6,555 | (740) |
Federal income tax (expense) benefit | (2,371) | (1,344) | 76 |
Other comprehensive income (loss) before reclassification, net of tax | 8,921 | 5,211 | (664) |
Amounts reclassified from AOCI | (456) | 47 | 399 |
Federal income tax expense | 95 | (9) | (76) |
Amounts reclassified from AOCI, net of tax | (361) | 38 | 323 |
Other comprehensive income (loss) | 8,560 | 5,249 | (341) |
Ending balance | $ 13,246 | $ 4,686 | (563) |
Accumulated Other Comprehensive Income (Loss) | Cumulative Effect, Period of Adoption, Adjustment | |||
Changes in accumulated other comprehensive income | |||
Beginning balance | (3,215) | ||
Accumulated Other Comprehensive Income (Loss) | Cumulative Effect, Period of Adoption, Adjusted Balance | |||
Changes in accumulated other comprehensive income | |||
Beginning balance | $ (222) |
Underwriting Information - Repo
Underwriting Information - Reportable Segments (Details) | 12 Months Ended |
Dec. 31, 2020segment | |
Reportable segment | |
Number of reportable segments | 1 |
Underwriting Information - Gros
Underwriting Information - Gross Written Premiums by Product (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Gross written premiums | |||||||||||
Amount | $ 96,092 | $ 102,967 | $ 83,807 | $ 71,494 | $ 73,342 | $ 66,242 | $ 58,346 | $ 54,031 | $ 354,360 | $ 251,961 | $ 154,891 |
% of GWP | 100.00% | 100.00% | 100.00% | ||||||||
Residential Earthquake | |||||||||||
Gross written premiums | |||||||||||
Amount | $ 140,934 | $ 130,473 | $ 81,679 | ||||||||
% of GWP | 39.80% | 51.80% | 52.70% | ||||||||
Commercial Earthquake | |||||||||||
Gross written premiums | |||||||||||
Amount | $ 58,890 | $ 38,741 | $ 20,946 | ||||||||
% of GWP | 16.60% | 15.40% | 13.50% | ||||||||
Commercial All Risk | |||||||||||
Gross written premiums | |||||||||||
Amount | $ 49,849 | $ 32,788 | $ 27,680 | ||||||||
% of GWP | 14.10% | 13.00% | 17.90% | ||||||||
Specialty Homeowners | |||||||||||
Gross written premiums | |||||||||||
Amount | $ 53,933 | $ 30,358 | $ 14,338 | ||||||||
% of GWP | 15.20% | 12.00% | 9.30% | ||||||||
Inland Marine | |||||||||||
Gross written premiums | |||||||||||
Amount | $ 15,423 | $ 2,465 | |||||||||
% of GWP | 4.30% | 1.00% | |||||||||
Hawaii Hurricane | |||||||||||
Gross written premiums | |||||||||||
Amount | $ 13,824 | $ 10,764 | $ 8,128 | ||||||||
% of GWP | 3.90% | 4.30% | 5.20% | ||||||||
Residential Flood | |||||||||||
Gross written premiums | |||||||||||
Amount | $ 8,176 | $ 5,216 | $ 2,120 | ||||||||
% of GWP | 2.30% | 2.10% | 1.40% | ||||||||
Other | |||||||||||
Gross written premiums | |||||||||||
Amount | $ 13,331 | $ 1,156 | |||||||||
% of GWP | 3.80% | 0.40% |
Underwriting Information - Gr_2
Underwriting Information - Gross Written Premiums by State (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Gross written premiums | |||||||||||
Amount | $ 96,092 | $ 102,967 | $ 83,807 | $ 71,494 | $ 73,342 | $ 66,242 | $ 58,346 | $ 54,031 | $ 354,360 | $ 251,961 | $ 154,891 |
% of GWP | 100.00% | 100.00% | 100.00% | ||||||||
California | |||||||||||
Gross written premiums | |||||||||||
Amount | $ 172,765 | $ 141,743 | $ 82,119 | ||||||||
% of GWP | 48.80% | 56.30% | 53.00% | ||||||||
Texas | |||||||||||
Gross written premiums | |||||||||||
Amount | $ 67,974 | $ 44,087 | $ 32,568 | ||||||||
% of GWP | 19.20% | 17.50% | 21.00% | ||||||||
Hawaii | |||||||||||
Gross written premiums | |||||||||||
Amount | $ 16,398 | $ 11,851 | $ 8,128 | ||||||||
% of GWP | 4.60% | 4.70% | 5.20% | ||||||||
Washington | |||||||||||
Gross written premiums | |||||||||||
Amount | $ 14,328 | $ 9,607 | $ 5,658 | ||||||||
% of GWP | 4.00% | 3.80% | 3.70% | ||||||||
North Carolina | |||||||||||
Gross written premiums | |||||||||||
Amount | $ 11,143 | $ 3,894 | $ 1,568 | ||||||||
% of GWP | 3.10% | 1.50% | 1.00% | ||||||||
Oregon | |||||||||||
Gross written premiums | |||||||||||
Amount | $ 10,038 | $ 7,396 | $ 5,286 | ||||||||
% of GWP | 2.80% | 2.90% | 3.40% | ||||||||
South Carolina | |||||||||||
Gross written premiums | |||||||||||
Amount | $ 9,196 | $ 6,185 | $ 3,208 | ||||||||
% of GWP | 2.60% | 2.50% | 2.10% | ||||||||
Mississippi | |||||||||||
Gross written premiums | |||||||||||
Amount | $ 7,461 | $ 4,769 | $ 2,585 | ||||||||
% of GWP | 2.10% | 1.90% | 1.70% | ||||||||
Other | |||||||||||
Gross written premiums | |||||||||||
Amount | $ 45,057 | $ 22,429 | $ 13,771 | ||||||||
% of GWP | 12.80% | 8.90% | 8.90% |
Underwriting Information (Detai
Underwriting Information (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020USD ($) | Sep. 30, 2020USD ($) | Jun. 30, 2020USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | Sep. 30, 2019USD ($) | Jun. 30, 2019USD ($) | Mar. 31, 2019USD ($) | Dec. 31, 2020USD ($)itemproduct | Dec. 31, 2019USD ($) | Dec. 31, 2018USD ($) | |
Disaggregation of Revenue | |||||||||||
Number of program administrators | item | 2 | ||||||||||
Number of products | product | 4 | ||||||||||
Amount | $ 96,092 | $ 102,967 | $ 83,807 | $ 71,494 | $ 73,342 | $ 66,242 | $ 58,346 | $ 54,031 | $ 354,360 | $ 251,961 | $ 154,891 |
% of GWP | 100.00% | 100.00% | 100.00% | ||||||||
Sales Revenue | Product Concentration Risk | |||||||||||
Disaggregation of Revenue | |||||||||||
Amount | $ 191,300 | $ 148,600 | $ 104,900 | ||||||||
% of GWP | 54.00% | 59.00% | 67.70% |
Retirement and Post-Employmen_2
Retirement and Post-Employment Retirement Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Retirement and Post-Employment Retirement Plans | |||
Employer matching participants gross wages (as a percent) | 3.00% | ||
Contributions to plan | $ 0.3 | $ 0.3 | $ 0.2 |
Income Taxes - Excise Tax (Deta
Income Taxes - Excise Tax (Details) | 12 Months Ended |
Dec. 31, 2020 | |
Income Taxes | |
Federal excise tax rate (as a percent) | 1.00% |
Income Taxes - Federal income t
Income Taxes - Federal income tax expense (benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Income Taxes | |||
Current | $ (1,128) | $ 6,810 | $ (6) |
Deferred | 1,094 | 646 | |
Income tax expense (benefit) | $ (34) | $ 7,456 | $ (6) |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Deferred tax assets: | ||
Losses and LAE reserve discount | $ 238 | $ 10 |
Net operating losses | 680 | 74 |
Investment amortization | 85 | |
Unearned premiums | 6,272 | 3,748 |
Capitalized organizational costs | 244 | 274 |
Deferred compensation | 511 | |
Other | 652 | 390 |
Total deferred tax assets | 8,597 | 4,581 |
Deferred tax liabilities: | ||
Deferred acquisition costs | (7,454) | (4,468) |
Unrealized gains on investments | (3,884) | (1,396) |
Internally developed software | (1,283) | (640) |
Other | (672) | (2) |
Total deferred tax liabilities | (13,293) | (6,506) |
Net deferred tax liability before valuation allowance | (4,696) | (1,925) |
Valuation allowance | (680) | (74) |
Total net deferred tax liabilities | $ (5,376) | $ (1,999) |
Income Taxes - Effective tax ra
Income Taxes - Effective tax rate (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Effective Income Tax Rate Reconciliation, Amount | |||
Expense computed at federal tax rate | $ 1,321 | $ 3,802 | $ 3,825 |
Non‑U.S. group member income | (4,409) | ||
Stock-based compensation | (1,538) | 4,822 | |
Dividend received deduction and tax‑exempt interest | (67) | (36) | (144) |
Valuation allowance | 606 | (1,677) | 678 |
Other | (356) | 545 | 44 |
Income tax expense (benefit) | $ (34) | $ 7,456 | $ (6) |
Effective Income Tax Rate Reconciliation, Percent | |||
Expense computed at federal tax rate | 21.00% | 21.00% | 21.00% |
Non‑U.S. group member income | (24.21%) | ||
Stock-based compensation | (24.44%) | 26.63% | |
Dividend received deduction and tax‑exempt interest | (1.06%) | (0.20%) | (0.79%) |
Valuation allowance | 9.63% | (9.27%) | 3.72% |
Other | (5.67%) | 3.01% | 0.24% |
Income tax expense (benefit) | (0.54%) | 41.17% | (0.04%) |
Unrecognized tax benefits | $ 0 | $ 0 | |
Non-deductible stock compensation charge | $ 23,100 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Earnings Per Share | |||||||||||
Net income | $ (1,849) | $ (15,682) | $ 12,012 | $ 11,776 | $ 10,880 | $ 7,454 | $ 6,698 | $ (14,411) | $ 6,257 | $ 10,621 | $ 18,219 |
Net income - basic | 6,257 | 10,621 | 18,219 | ||||||||
Net income - diluted | $ 6,527 | $ 10,621 | $ 18,219 | ||||||||
Weighted average common shares outstanding: | |||||||||||
Basic (in shares) | 24,872,251 | 21,501,541 | 17,000,000 | ||||||||
Common Share equivalents (in shares) | 726,396 | 333,393 | |||||||||
Diluted (in shares) | 25,598,647 | 21,834,934 | 17,000,000 | ||||||||
Earnings per share: | |||||||||||
Basic (in dollars per share) | $ (0.07) | $ (0.62) | $ 0.49 | $ 0.49 | $ 0.46 | $ 0.32 | $ 0.30 | $ (0.85) | $ 0.25 | $ 0.49 | $ 1.07 |
Earnings per share: | |||||||||||
Diluted (in dollars per share) | $ (0.07) | $ (0.62) | $ 0.48 | $ 0.48 | $ 0.45 | $ 0.31 | $ 0.30 | $ (0.85) | $ 0.24 | $ 0.49 | $ 1.07 |
Statutory financial informati_3
Statutory financial information (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Statutory Accounting Practices | ||||
Statutory net income (loss) | $ 1,753 | $ (17,911) | $ 9,609 | |
Statutory capital and surplus | 213,721 | 116,296 | 63,731 | |
Shareholder’s equity | 363,713 | 218,556 | 96,292 | $ 78,414 |
BERMUDA | ||||
Statutory Accounting Practices | ||||
Statutory net income (loss) | 900 | 18,500 | $ 17,300 | |
Statutory capital and surplus | 39,200 | 38,300 | ||
Minimum statutory solvency margin | 1,200 | 1,200 | ||
Shareholder’s equity | $ 41,900 | $ 39,700 | ||
BERMUDA | Minimum | ||||
Statutory Accounting Practices | ||||
Liquidity ratio | 75.00% |
Dividend Restrictions (Details)
Dividend Restrictions (Details) $ in Millions | Dec. 31, 2020USD ($) |
Dividend Restrictions | |
Threshold dividend or distribution without the prior approval | $ 11.3 |
Palomar Specialty Reinsurance Company Bermuda Ltd | |
Dividend Restrictions | |
Dividends receivable | $ 10.5 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Dec. 31, 2020USD ($)LetterOfCredit |
Letters of Credit | |
Letters of credit, collateralized | $ 3.2 |
Standby Letters of Credit | |
Letters of Credit | |
Letters of credit, number | LetterOfCredit | 3 |
Standby Letters of Credit | Irrevocable Bank Standby Letter of Credit, One, Expires 31 December 2021 | |
Letters of Credit | |
Letters of credit, amount | $ 1.5 |
Standby Letters of Credit | Irrevocable Bank Standby Letter of Credit, Two, Expires 31 December 2021 | |
Letters of Credit | |
Letters of credit, amount | 0.5 |
Standby Letters of Credit | Irrevocable Bank Standby Letter of Credit, Auto Renews | |
Letters of Credit | |
Letters of credit, amount | $ 0.4 |
Selected Quarterly Financial _2
Selected Quarterly Financial Data (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Selected Quarterly Financial Data (unaudited) | |||||||||||
Gross written premiums | $ 96,092 | $ 102,967 | $ 83,807 | $ 71,494 | $ 73,342 | $ 66,242 | $ 58,346 | $ 54,031 | $ 354,360 | $ 251,961 | $ 154,891 |
Total revenues | 42,295 | 44,998 | 43,149 | 38,019 | 34,623 | 30,461 | 25,905 | 22,307 | 168,463 | 113,296 | 72,971 |
Net income (loss) | (1,849) | (15,682) | 12,012 | 11,776 | 10,880 | 7,454 | 6,698 | (14,411) | 6,257 | 10,621 | 18,219 |
Comprehensive income (loss) | $ 959 | $ (14,773) | $ 22,688 | $ 5,943 | $ 9,670 | $ 8,428 | $ 9,996 | $ (12,224) | $ 14,817 | $ 15,870 | $ 17,878 |
Earnings per share: | |||||||||||
Basic (in dollars per share) | $ (0.07) | $ (0.62) | $ 0.49 | $ 0.49 | $ 0.46 | $ 0.32 | $ 0.30 | $ (0.85) | $ 0.25 | $ 0.49 | $ 1.07 |
Diluted (in dollars per share) | $ (0.07) | $ (0.62) | $ 0.48 | $ 0.48 | $ 0.45 | $ 0.31 | $ 0.30 | $ (0.85) | $ 0.24 | $ 0.49 | $ 1.07 |
Schedule II - Balance Sheets (D
Schedule II - Balance Sheets (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Investments: | ||||
Fixed maturity securities available for sale, at fair value (amortized cost: $381,279 in 2020; $211,278 in 2019) | $ 397,987 | $ 217,151 | ||
Equity securities at fair value | 24,322 | 22,328 | ||
Total investments | 422,309 | 239,479 | ||
Cash and cash equivalents | 33,538 | 33,119 | ||
Accrued investment income | 2,545 | 1,386 | ||
Prepaid expenses and other assets | 34,119 | 14,861 | ||
Total assets | 729,092 | 395,462 | ||
Liabilities | ||||
Accounts payable and other liabilities | 20,730 | 13,555 | ||
Income taxes payable | 1,117 | |||
Deferred tax liabilities | 5,376 | 1,999 | ||
Total liabilities | 365,379 | 176,906 | ||
Shareholder’s equity | ||||
Preferred stock, $0.0001 par value, 5,000,000 shares authorized as of December 31, 2020 and December 31, 2019, respectively, 0 shares issued and outstanding as of December 31, 2020 and December 31, 2019 | ||||
Common stock, $0.0001 par value, 500,000,000 shares authorized, 25,525,796 and 23,468,750 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively | 3 | 2 | ||
Additional paid-in capital | 310,507 | 180,012 | ||
Accumulated other comprehensive income | 13,246 | 4,686 | ||
Retained earnings | 39,957 | 33,856 | ||
Total stockholders' equity | 363,713 | 218,556 | $ 96,292 | $ 78,414 |
Total liabilities and stockholders' equity | 729,092 | 395,462 | ||
Fixed maturity securities available for sale, amortized cost | 381,279 | 211,278 | ||
Equity securities, cost | $ 22,291 | $ 21,336 | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | ||
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 | ||
Common stock, shares issued (in shares) | 25,525,796 | 23,468,750 | ||
Common stock, shares outstanding (in shares) | 25,525,796 | 23,468,750 | ||
Parent Company | ||||
Investments: | ||||
Fixed maturity securities available for sale, at fair value (amortized cost: $381,279 in 2020; $211,278 in 2019) | $ 51,252 | $ 29,120 | ||
Equity securities at fair value | 1,727 | 1,696 | ||
Total investments | 52,979 | 30,816 | ||
Cash and cash equivalents | 7,290 | 1,654 | ||
Accrued investment income | 300 | 126 | ||
Prepaid expenses and other assets | 7,322 | 36 | ||
Receivables from subsidiaries | 1,552 | |||
Investment in subsidiaries | 317,663 | 189,313 | ||
Total assets | 387,106 | 221,945 | ||
Liabilities | ||||
Accounts payable and other liabilities | 94 | 268 | ||
Payables to subsidiaries | 17,923 | |||
Income taxes payable | 1,122 | |||
Deferred tax liabilities | 5,376 | 1,999 | ||
Total liabilities | 23,393 | 3,389 | ||
Shareholder’s equity | ||||
Common stock, $0.0001 par value, 500,000,000 shares authorized, 25,525,796 and 23,468,750 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively | 3 | 2 | ||
Additional paid-in capital | 310,507 | 180,012 | ||
Accumulated other comprehensive income | 13,246 | 4,686 | ||
Retained earnings | 39,957 | 33,856 | ||
Total stockholders' equity | 363,713 | 218,556 | ||
Total liabilities and stockholders' equity | 387,106 | 221,945 | ||
Fixed maturity securities available for sale, amortized cost | 50,177 | 28,413 | ||
Equity securities, cost | $ 1,661 | $ 1,661 | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 | ||
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 | ||
Common stock, shares issued (in shares) | 25,525,796 | 23,468,750 | ||
Common stock, shares outstanding (in shares) | 23,468,750 | 17,000,000 |
Schedule II - Balance Sheets -
Schedule II - Balance Sheets - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 31, 2020 | Dec. 31, 2019 |
Fixed maturity securities available for sale, amortized cost | $ 381,279 | $ 211,278 |
Equity securities, cost | $ 22,291 | $ 21,336 |
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 25,525,796 | 23,468,750 |
Common stock, shares outstanding (in shares) | 25,525,796 | 23,468,750 |
Parent Company | ||
Fixed maturity securities available for sale, amortized cost | $ 50,177 | $ 28,413 |
Equity securities, cost | $ 1,661 | $ 1,661 |
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 | |
Preferred stock, shares outstanding (in shares) | 0 | |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 25,525,796 | 23,468,750 |
Common stock, shares outstanding (in shares) | 23,468,750 | 17,000,000 |
Schedule II - Statements of Inc
Schedule II - Statements of Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Net investment income | $ 8,612 | $ 5,975 | $ 3,238 | ||||||||
Net realized and unrealized losses on investments | 1,488 | 4,443 | (2,569) | ||||||||
Total revenues | $ 42,295 | $ 44,998 | $ 43,149 | $ 38,019 | $ 34,623 | $ 30,461 | $ 25,905 | $ 22,307 | 168,463 | 113,296 | 72,971 |
Other operating expenses | 162,240 | 95,219 | 54,758 | ||||||||
Income before income taxes | 6,223 | 18,077 | 18,213 | ||||||||
Income tax expense (benefit) | (34) | 7,456 | (6) | ||||||||
Net income | (1,849) | (15,682) | 12,012 | 11,776 | 10,880 | 7,454 | 6,698 | (14,411) | 6,257 | 10,621 | 18,219 |
Other comprehensive income: | |||||||||||
Net unrealized gains (losses) on securities available for sale, net of taxes | 8,560 | 5,249 | (341) | ||||||||
Total comprehensive income | $ 959 | $ (14,773) | $ 22,688 | $ 5,943 | $ 9,670 | $ 8,428 | $ 9,996 | $ (12,224) | 14,817 | 15,870 | 17,878 |
Parent Company | |||||||||||
Net investment income | 939 | 1,039 | 61 | ||||||||
Net realized and unrealized losses on investments | 63 | 131 | (2) | ||||||||
Total revenues | 1,002 | 1,170 | 59 | ||||||||
Other operating expenses | 8,696 | 8 | |||||||||
Income before income taxes | (7,694) | 1,162 | 59 | ||||||||
Income tax expense (benefit) | (34) | 7,441 | |||||||||
Income (loss) before equity in net income of subsidiaries | (7,660) | (6,279) | 59 | ||||||||
Equity in net income of subsidiaries | 13,917 | 16,900 | 18,160 | ||||||||
Net income | 6,257 | 10,621 | 18,219 | ||||||||
Other comprehensive income: | |||||||||||
Net unrealized gains (losses) on securities available for sale, net of taxes | 1,075 | 708 | (87) | ||||||||
Equity in other comprehensive income of subsidiaries, net of taxes | 7,485 | 4,541 | (254) | ||||||||
Total comprehensive income | $ 14,817 | $ 15,870 | $ 17,878 |
Schedule II - Statements of Cas
Schedule II - Statements of Cash Flows (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | |
Operating activities | |||
Net income | $ 6,257 | $ 10,621 | $ 18,219 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Net realized and unrealized losses on investments | (1,488) | (4,443) | 2,569 |
Amortization of premium on fixed maturity securities | 1,214 | 431 | 481 |
Deferred income tax expense | 1,094 | 646 | |
Net cash provided by (used in) operating activities | 53,551 | 41,700 | 22,808 |
Investing activities | |||
Purchases of fixed maturity securities | (295,002) | (211,587) | (102,745) |
Sales and maturities of fixed maturity securities | 124,243 | 124,151 | 81,215 |
Net cash used in investing activities | (181,443) | (80,566) | (25,365) |
Financing activities | |||
Proceeds from initial public offering, net of offering costs | 87,411 | ||
Distribution to stockholder | (5,120) | ||
Repayment of surplus notes | (20,000) | (17,500) | |
Proceeds from common stock issued via equity incentive plans | 741 | ||
Net cash provided by financing activities | 128,329 | 62,291 | 1,549 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 437 | 23,425 | (1,008) |
Cash, cash equivalents and restricted cash at beginning of period | 33,349 | 9,924 | 10,932 |
Cash, cash equivalents and restricted cash at end of period | 33,786 | 33,349 | 9,924 |
Supplementary cash flow information: | |||
Cash paid for income taxes | 7,182 | 5,645 | 11 |
Parent Company | |||
Operating activities | |||
Net income | 6,257 | 10,621 | 18,219 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Equity in undistributed earnings of subsidiaries | (13,917) | (16,900) | (18,160) |
Net realized and unrealized losses on investments | (63) | (131) | 2 |
Amortization of premium on fixed maturity securities | 350 | 114 | |
Deferred income tax expense | 1,094 | 646 | |
Other | 546 | ||
Changes in operating assets and liabilities: | 7,772 | 4,218 | (67) |
Net cash provided by (used in) operating activities | 1,493 | (1,432) | 540 |
Investing activities | |||
Purchases of fixed maturity securities | (71,048) | (73,901) | |
Sales and maturities of fixed maturity securities | 6,651 | 13,930 | |
Cash paid to subsidiaries | (59,789) | ||
Cash received from subsidiary | 226 | ||
Net cash used in investing activities | (124,186) | (59,745) | |
Financing activities | |||
Proceeds from initial public offering, net of offering costs | 87,411 | ||
Distribution to stockholder | (5,120) | ||
Repayment of surplus notes | (20,000) | ||
Proceeds from common stock issued via equity incentive plans | 2,782 | ||
Net cash provided by financing activities | 128,329 | 62,291 | |
Net increase (decrease) in cash, cash equivalents and restricted cash | 5,636 | 1,114 | 540 |
Cash, cash equivalents and restricted cash at beginning of period | 1,654 | 540 | |
Cash, cash equivalents and restricted cash at end of period | 7,290 | 1,654 | $ 540 |
Supplementary cash flow information: | |||
Cash paid for income taxes | 7,182 | $ 5,645 | |
Stock Issued in January | |||
Financing activities | |||
Proceeds from stock offering, net of offering costs | 35,464 | ||
Stock Issued in January | Parent Company | |||
Financing activities | |||
Proceeds from stock offering, net of offering costs | 35,464 | ||
Stock Issued in June | |||
Financing activities | |||
Proceeds from stock offering, net of offering costs | 90,083 | ||
Stock Issued in June | Parent Company | |||
Financing activities | |||
Proceeds from stock offering, net of offering costs | $ 90,083 |
Schedule V - Valuation and Qu_2
Schedule V - Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2020 | Dec. 31, 2019 | |
Valuation Allowance for deferred tax assets | ||
Valuation and Qualifying Accounts | ||
Balance at Beginning of Period | $ 74 | $ 1,677 |
Amount Charged to Expense | 606 | |
Amount Written Off | (1,603) | |
Balance at End of Period | 680 | 74 |
Valuation Allowance for premium receivable | ||
Valuation and Qualifying Accounts | ||
Balance at Beginning of Period | 150 | |
Amount Charged to Expense | 53 | |
Balance at End of Period | $ 203 | $ 150 |