Document and Entity Information
Document and Entity Information - $ / shares | 9 Months Ended | |
Sep. 30, 2021 | Nov. 01, 2021 | |
Cover [Abstract] | ||
Entity Central Index Key | 0001761312 | |
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-38873 | |
Entity Registrant Name | Palomar Holdings, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 83-3972551 | |
Entity Address, Address Line One | 7979 Ivanhoe Avenue | |
Entity Address, Address Line Two | Suite 500 | |
Entity Address, City or Town | La Jolla | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92037 | |
City Area Code | 619 | |
Local Phone Number | 567-5290 | |
Title of 12(b) Security | Common Stock, par value $0.0001 per share | |
Entity Listing, Par Value Per Share | $ 0.0001 | |
Trading Symbol | PLMR | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 25,415,299 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Investments: | ||
Fixed maturity securities available for sale, at fair value (amortized cost: $397,955 in 2021; $381,279 in 2020) | $ 408,046 | $ 397,987 |
Equity securities, at fair value (cost: $17,829 in 2021; $22,291 in 2020) | 17,358 | 24,322 |
Total investments | 425,404 | 422,309 |
Cash and cash equivalents | 41,405 | 33,538 |
Restricted cash | 229 | 248 |
Accrued investment income | 2,506 | 2,545 |
Premium receivable | 75,543 | 48,842 |
Deferred policy acquisition costs | 53,995 | 35,481 |
Reinsurance recoverable on unpaid losses and loss adjustment expenses | 129,044 | 94,566 |
Reinsurance recoverable on paid losses and loss adjustment expenses | 54,431 | 10,162 |
Ceded unearned premiums | 42,949 | 35,031 |
Prepaid expenses and other assets | 40,212 | 34,119 |
Property and equipment, net | 578 | 739 |
Intangible assets, net | 10,512 | 11,512 |
Total assets | 876,808 | 729,092 |
Liabilities: | ||
Accounts payable and other accrued liabilities | 21,551 | 20,730 |
Reserve for losses and loss adjustment expenses | 175,687 | 129,036 |
Unearned premiums | 257,667 | 183,489 |
Ceded premium payable | 32,426 | 22,233 |
Funds held under reinsurance treaty | 7,282 | 4,515 |
Deferred tax liabilities, net | 4,418 | 5,376 |
Total liabilities | 499,031 | 365,379 |
Stockholders' equity: | ||
Preferred stock, $0.0001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding as of September 30, 2021 and December 31, 2020 | ||
Common stock, $0.0001 par value, 500,000,000 shares authorized, 25,415,299 and 25,525,796 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively | 3 | 3 |
Additional paid-in capital | 316,352 | 310,507 |
Accumulated other comprehensive income | 8,102 | 13,246 |
Retained earnings | 53,320 | 39,957 |
Total stockholders' equity | 377,777 | 363,713 |
Total liabilities and stockholders' equity | $ 876,808 | $ 729,092 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Condensed Consolidated Balance Sheets | ||
Fixed maturity securities available for sale, amortized cost | $ 397,955 | $ 381,279 |
Equity securities, cost | $ 17,829 | $ 22,291 |
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) | 25,415,299 | 25,525,796 |
Common stock, shares outstanding (in shares) | 25,415,299 | 25,525,796 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Revenues: | ||||
Gross written premiums | $ 152,332 | $ 102,967 | $ 385,267 | $ 258,268 |
Ceded written premiums | (58,073) | (41,570) | (153,005) | (101,264) |
Net written premiums | 94,259 | 61,397 | 232,262 | 157,004 |
Change in unearned premiums | (29,539) | (19,377) | (66,274) | (40,859) |
Net earned premiums | 64,720 | 42,020 | 165,988 | 116,145 |
Net investment income | 2,236 | 2,138 | 6,649 | 6,287 |
Net realized and unrealized gains (losses) on investments | (313) | 24 | (752) | 1,243 |
Commission and other income | 1,018 | 816 | 2,735 | 2,492 |
Total revenues | 67,661 | 44,998 | 174,620 | 126,167 |
Expenses: | ||||
Losses and loss adjustment expenses | 28,475 | 41,060 | 31,288 | 46,901 |
Acquisition expenses | 26,412 | 17,976 | 68,150 | 45,909 |
Other underwriting expenses | 12,652 | 7,805 | 39,438 | 24,732 |
Total expenses | 67,539 | 66,841 | 138,876 | 117,542 |
Income (loss) before income taxes | 122 | (21,843) | 35,744 | 8,625 |
Income tax expense | (124) | (6,158) | 6,529 | 523 |
Net income (loss) | 246 | (15,685) | 29,215 | 8,102 |
Other comprehensive income, net: | ||||
Net unrealized gains (losses) on securities available for sale for the three and nine months ended September 30, 2021 and 2020, respectively | (1,655) | 909 | (5,144) | 5,752 |
Net comprehensive income (loss) | $ (1,409) | $ (14,776) | $ 24,071 | $ 13,854 |
Per Share Data: | ||||
Basic earnings per share | $ 0.01 | $ (0.62) | $ 1.15 | $ 0.33 |
Diluted earnings per share | $ 0.01 | $ (0.62) | $ 1.12 | $ 0.32 |
Weighted-average common shares outstanding: | ||||
Basic | 25,388,630 | 25,492,274 | 25,473,006 | 24,654,722 |
Diluted | 26,043,680 | 25,492,274 | 26,133,664 | 25,384,518 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | Total |
Beginning balance at Dec. 31, 2019 | $ 2 | $ 180,012 | $ 4,686 | $ 33,856 | $ 218,556 |
Beginning balance (in shares) at Dec. 31, 2019 | 23,468,750 | ||||
Changes in Stockholders' Equity | |||||
Other comprehensive income (loss), net of tax | 5,752 | 5,752 | |||
Stock-based compensation | 1,457 | 1,457 | |||
Issuance of common stock in stock offerings, net of offering costs | $ 1 | 125,546 | 125,547 | ||
Issuance of common stock in stock offerings, net of offering costs (in shares) | 1,900,000 | ||||
Issuance of common stock via employee stock purchase plan | 741 | 741 | |||
Issuance of common stock via employee stock purchase plan (in shares) | 28,367 | ||||
Issuance of common stock via equity incentive plan | 1,740 | 1,740 | |||
Issuance of common stock via equity incentive plan (in shares) | 121,840 | ||||
Net income | 8,102 | 8,102 | |||
Ending balance at Sep. 30, 2020 | $ 3 | 309,496 | 10,438 | 41,958 | 361,895 |
Ending balance (in shares) at Sep. 30, 2020 | 25,518,957 | ||||
Beginning balance at Dec. 31, 2020 | $ 3 | 310,507 | 13,246 | 39,957 | $ 363,713 |
Beginning balance (in shares) at Dec. 31, 2020 | 25,525,796 | 25,525,796 | |||
Changes in Stockholders' Equity | |||||
Other comprehensive income (loss), net of tax | (5,144) | $ (5,144) | |||
Stock-based compensation | 3,370 | 3,370 | |||
Issuance of common stock via employee stock purchase plan | 719 | $ 719 | |||
Issuance of common stock via employee stock purchase plan (in shares) | 9,793 | 9,793 | |||
Issuance of common stock via equity incentive plan | 1,756 | $ 1,756 | |||
Issuance of common stock via equity incentive plan (in shares) | 118,806 | ||||
Repurchases of common stock | (15,852) | (15,852) | |||
Repurchases of common stock (in shares) | (239,096) | ||||
Net income | 29,215 | 29,215 | |||
Ending balance at Sep. 30, 2021 | $ 3 | $ 316,352 | $ 8,102 | $ 53,320 | $ 377,777 |
Ending balance (in shares) at Sep. 30, 2021 | 25,415,299 | 25,415,299 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Operating activities | ||
Net cash provided by (used in) operating activities | $ 33,418 | $ 44,170 |
Investing activities | ||
Purchases of property and equipment | (18) | (84) |
Purchases of fixed maturity securities | (88,755) | (251,504) |
Purchases of equity securities | (35,675) | (46,340) |
Sales and maturities of fixed maturity securities | 70,696 | 84,663 |
Sales of equity securities | 41,553 | 24,662 |
Securities receivable or payable, net | 17 | (2,748) |
Payment of additional costs associated with purchase of policy renewal rights | (11) | |
Net cash provided by (used in) investing activities | (12,193) | (191,351) |
Financing activities | ||
Proceeds from stock offerings, net of offering costs | 125,547 | |
Proceeds from common stock issued via employee stock purchase plan | 719 | 741 |
Proceeds from common stock issued via stock option exercises | 1,756 | 1,740 |
Repurchases of common stock | (15,852) | |
Net cash provided by (used in) financing activities | (13,377) | 128,028 |
Net increase (decrease) in cash, cash equivalents and restricted cash | 7,848 | (19,153) |
Cash, cash equivalents and restricted cash at beginning of period | 33,786 | 33,349 |
Cash, cash equivalents and restricted cash at end of period | 41,634 | 14,196 |
Supplementary cash flow information: | ||
Cash paid for income taxes | $ 2,104 | $ 7,053 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Dec. 31, 2019 |
Cash and cash equivalents and restricted cash and cash equivalents | ||||
Cash and cash equivalents | $ 41,405 | $ 33,538 | ||
Restricted cash | 229 | 248 | ||
Cash and cash equivalents and restricted cash | $ 41,634 | $ 33,786 | $ 14,196 | $ 33,349 |
Summary of Operations and Basis
Summary of Operations and Basis of Presentation | 9 Months Ended |
Sep. 30, 2021 | |
Summary of Operations and Basis of Presentation. | |
Summary of Operations and Basis of Presentation | 1. Summary of Operations and Basis of Presentation Summary of Operations Palomar Holdings, Inc. (the “Company”) is a Delaware incorporated insurance holding company that was founded in 2014. The Company has several wholly owned subsidiaries including an Oregon domiciled insurance company, Palomar Specialty Insurance Company (“PSIC”), a Bermuda based reinsurance company, Palomar Specialty Reinsurance Company Bermuda Ltd. (“PSRE”), an Arizona domiciled surplus lines insurance company, Palomar Excess and Surplus Insurance Company (“PESIC”), and a California domiciled property and casualty insurance agency, Palomar Insurance Agency, DBA Palomar General Insurance Agency (“PGIA”). Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and include the accounts of the Company and its wholly-owned subsidiaries. These condensed consolidated financial statements do not contain all information and footnotes required by U.S. GAAP for complete consolidated financial statements. For a more complete description of the Company’s business and accounting policies, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 9, 2021 (the “2020 Annual Report on Form 10-K”) In the opinion of management, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included. Such adjustments consist only of normal recurring items. Interim results are not necessarily indicative of results of operations for the full year. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the condensed consolidated financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein. All revisions to accounting estimates are recognized in the period in which the estimates are revised. Significant estimates reflected in the Company’s condensed consolidated financial statements include, but are not limited to, reserves for losses and loss adjustment expenses, reinsurance recoverables on unpaid losses, and the fair values of investments. Recent Accounting Pronouncements Recently adopted accounting pronouncements Income Taxes In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes. 2020. The Company adopted this guidance on January 1, 2021 and adoption did not have a material impact on the consolidated financial statements. |
Investments
Investments | 9 Months Ended |
Sep. 30, 2021 | |
Investments | |
Investments | 2. Investments The Company’s available-for-sale investments are summarized as follows: Gross Gross Amortized Unrealized Unrealized Fair September 30, 2021 Cost or Cost Gains Losses Value (in thousands) Fixed maturities: U.S. Governments $ 18,965 $ 461 $ (115) $ 19,311 States, territories, and possessions 6,171 348 (118) 6,401 Political subdivisions 1,494 94 — 1,588 Special revenue excluding mortgage/asset-backed securities 43,376 1,228 (174) 44,430 Corporate and other 248,480 7,751 (1,131) 255,100 Mortgage/asset-backed securities 79,469 1,849 (102) 81,216 Total available-for-sale investments $ 397,955 $ 11,731 $ (1,640) $ 408,046 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 Corporate and other 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 Security holdings in an unrealized loss position As of September 30, 2021, the Company held 153 fixed maturity securities in an unrealized loss position with a total estimated fair value of $112.3 million and total gross unrealized losses of $1.6 million. 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. The aggregate fair value and gross unrealized losses of the Company’s investments aggregated by investment category and the length of time these individual securities have been in a continuous unrealized loss position as of September 30, 2021 and December 31, 2020, are as follows: Less Than 12 Months More Than 12 Months Total Fair Unrealized Fair Unrealized Fair Unrealized September 30, 2021 Value Losses Value Losses Value Losses (in thousands) Fixed maturity securities: U.S. Governments $ 7,018 $ (105) $ 490 $ (10) $ 7,508 $ (115) States, territories, and possessions 3,236 (118) — — 3,236 (118) Political subdivisions — — — — — — Special revenue excluding mortgage/asset-backed securities 13,593 (174) — — 13,593 (174) Corporate and other 70,182 (799) 5,688 (332) 75,870 (1,131) Mortgage/asset-backed securities 9,628 (79) 2,443 (23) 12,071 (102) Total $ 103,657 $ (1,275) $ 8,621 $ (365) $ 112,278 $ (1,640) 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) Corporate and other 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) The Company reviews all securities with unrealized losses on a quarterly basis to assess whether the decline in the securities fair value necessitates the recognition of an allowance for credit losses. The Company considers numerous factors in its review as described in Footnote 1 of the Notes to the Consolidated Financial Statements in the 2020 Annual Report on Form 10-K. Contractual maturities of available-for-sale fixed maturity securities The amortized cost and fair value of fixed maturity securities at September 30, 2021, by contractual maturity, are shown below. Amortized Fair Cost Value (in thousands) Due within one year $ 27,733 $ 27,927 Due after one year through five years 134,550 137,757 Due after five years through ten years 112,259 116,275 Due after ten years 43,944 44,871 Mortgage and asset-backed securities 79,469 81,216 $ 397,955 $ 408,046 Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations. Net investment income summary Net investment income is summarized as follows: Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 (in thousands) (in thousands) Interest income $ 2,254 $ 2,149 $ 6,755 $ 6,242 Dividend income 104 109 261 354 Investment expense (122) (120) (367) (309) Net investment income $ 2,236 $ 2,138 $ 6,649 $ 6,287 Net realized and unrealized investment gains and losses The following table presents net realized and unrealized investment gains and losses: Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 (in thousands) (in thousands) Realized gains: Gains on sales of fixed maturity securities $ 117 $ 66 $ 335 $ 256 Gains on sales of equity securities 188 59 1,416 57 Total realized gains 305 125 1,751 313 Realized losses: Losses on sales of fixed maturity securities — — (1) (44) Losses on sales of equity securities — — — — Total realized losses — — (1) (44) Net realized investment gains 305 125 1,750 269 Net unrealized gains (losses) on equity securities (618) (101) (2,502) 974 Net realized and unrealized gains (losses) on investments $ (313) $ 24 $ (752) $ 1,243 Realized gains and losses on disposition of investments are based on specific identification of the investments sold on the settlement date. Proceeds from the sale of fixed maturity securities were $12.1 million and $29.2 million for the nine months ended September 30, 2021 and 2020, respectively. The Company places securities on statutory deposit with certain state agencies to retain the right to do business in those states. These securities are included in available-for-sale investments on the balance sheet. At both September 30, 2021 and December 31, 2020, the carrying value of securities on deposit with state regulatory authorities was $7.5 million. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2021 | |
Fair Value Measurements | |
Fair Value Measurements | 3. Fair Value Measurements Fair value is defined as the price that the Company would receive upon selling an investment in an orderly transaction to an independent buyer in the principal or most advantageous market of the investment. The three-tier hierarchy of inputs is summarized in the three broad levels listed below: Level 1—Unadjusted quoted prices are available in active markets for identical investments as of the reporting date. Level 2—Pricing inputs are quoted prices for similar investments in active markets; quoted prices for identical or similar investments in inactive markets; or valuations based on models where the significant inputs are observable or can be corroborated by observable market data. Level 3—Pricing inputs into models are unobservable for the investment. The unobservable inputs require significant management judgment or estimation. To measure fair value, the Company obtains quoted market prices for its investment securities from its outside investment managers. If a quoted market price is not available, the Company uses prices of similar securities. The fair values obtained from the outside investment managers are reviewed for reasonableness and any discrepancies are investigated for final valuation. The fair value of the Company’s investments in fixed maturity securities is estimated using relevant inputs, including available market information, benchmark curves, benchmarking of like securities, sector groupings, and matrix pricing. An Option Adjusted Spread model is also used to develop prepayment and interest rate scenarios. Industry standard models are used to analyze and value securities with embedded options or prepayment sensitivities. These fair value measurements are estimated based on observable, objectively verifiable market information rather than market quotes. Therefore, these investments are classified and disclosed in Level 2 of the hierarchy. The following tables present the hierarchy for financial assets and liabilities measured at fair value on a recurring basis as of September 30, 2021 and December 31, 2020. September 30, 2021 Level 1 Level 2 Level 3 Total (in thousands) Assets: Fixed maturity securities U.S. Governments $ — $ 19,311 $ — $ 19,311 States, territories, and possessions — 6,401 — 6,401 Political subdivisions — 1,588 — 1,588 Special revenue excluding mortgage/asset-backed securities — 44,430 — 44,430 Corporate and other — 255,100 — 255,100 Mortgage/asset-backed securities — 81,216 — 81,216 Equity securities 17,358 — — 17,358 Cash, cash equivalents, and restricted cash 41,634 — — 41,634 Total assets $ 58,992 $ 408,046 $ — $ 467,038 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 Corporate and other — 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 The carrying amounts of financial assets and liabilities reported in the accompanying condensed consolidated balance sheet including cash and cash equivalents, restricted cash, receivables, reinsurance recoverable, and accounts payable and other accrued liabilities approximate fair value due to their short term-maturity. Transfers between Level 3 and Level 2 securities result from changes in the availability of market observable inputs and are recorded at the beginning of the reporting period. As of September 30, 2021 and December 31, 2020, the Company had no fixed income securities classified as Level 3. |
Reserve for Losses and Loss Adj
Reserve for Losses and Loss Adjustment Expenses | 9 Months Ended |
Sep. 30, 2021 | |
Reserve for Losses and Loss Adjustment Expenses | |
Reserve for Losses and Loss Adjustment Expenses | 4. Reserve for Losses and Loss Adjustment Expenses The following table represents a reconciliation of changes in the ending reserve balances for losses and loss adjustment expenses (“LAE”): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 (in thousands) (in thousands) Reserve for losses and LAE net of reinsurance recoverables at beginning of period $ 23,633 $ 7,087 $ 34,470 $ 3,869 Add: Incurred losses and LAE, net of reinsurance, related to: Current year 28,286 40,803 34,202 46,867 Prior years 189 257 (2,914) 34 Total incurred 28,475 41,060 31,288 46,901 Deduct: Loss and LAE payments, net of reinsurance, related to: Current year 2,787 8,232 3,407 9,754 Prior years 2,678 375 15,708 1,476 Total payments 5,465 8,607 19,115 11,230 Reserve for losses and LAE net of reinsurance recoverables at end of period 46,643 39,540 46,643 39,540 Add: Reinsurance recoverables on unpaid losses and LAE at end of period 129,044 92,537 129,044 92,537 Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at end of period $ 175,687 $ 132,077 $ 175,687 $ 132,077 Considerable variability is inherent in the estimate of the reserve for losses and LAE. Although management believes the liability recorded for losses and LAE is adequate, the variability inherent in this estimate could result in changes to the ultimate liability, which may be material to stockholders’ equity. The Company experienced adverse prior year development of $0.2 million during the three months ended September 30, 2021 and adverse prior year development of $0.3 million in the three months ended September 30, 2020. Adverse prior year development during the three months ended September 30, 2021 was primarily due to higher than anticipated severity of attritional losses, partially offset by favorable development on catastrophe losses associated with certain hurricanes which occurred during the second half of 2020 in the Company’s Commercial All Risk and Specialty Homeowners line of business. The Company experienced favorable prior year development of $2.9 million during the nine months ended September 30, 2021 and adverse development of $0.03 million in the nine months ended September 30, 2020. Favorable prior year development during the nine months ended 30, 2021 associated with certain hurricanes which occurred during the second half of 2020 in the Company’s Commercial All Risk and Specialty Homeowners line of business. |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2021 | |
Stockholders' Equity | |
Stockholders' Equity | 5. Stockholders’ Equity Common stock reserved for future issuance Common stock reserved for future issuance consists of the following as of September 30, 2021: Stock options outstanding under 2019 Equity Incentive Plan 952,526 Restricted stock units outstanding under 2019 Equity Incentive Plan 168,195 Performance stock units outstanding under 2019 Equity Incentive Plan, at target 233,452 Shares authorized for future issuance under 2019 Equity Incentive Plan 2,259,725 Shares authorized for future issuance under 2019 Employee Stock Purchase Plan 681,840 Total 4,295,738 Stock based compensation The below table summarizes the Company’s stock-based compensation expense for each period presented: Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 (in thousands) (in thousands) Stock-Based Compensation $ 1,525 $ 551 $ 3,370 $ 1,457 Stock-based compensation expense is recognized on a straight-line basis over the vesting period of equity-based awards. For performance stock units (“PSUs”), any changes to expense resulting from differences in actual performance versus target are recognized over the remaining vesting period of the awards. The Company does not apply a forfeiture rate to unvested awards and accounts for forfeitures as they occur. All stock-based compensation is included in other underwriting expenses in the Company’s unaudited condensed consolidated statement of income and comprehensive income. 2019 Equity Incentive Plan On April 16, 2019, the Company's 2019 Equity Incentive Plan (the “2019 Plan”) became effective. The 2019 Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), performance shares and units, and other cash-based or share-based awards. In addition, the 2019 Plan contains a mechanism through which the Company may adopt a deferred compensation arrangement in the future. A total of 2,400,000 shares of common stock were initially authorized and reserved for issuance under the 2019 Plan. This reserve increases on January 1 of each year through 2029 by an amount equal to the smaller of: 3% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or an amount determined by the board of directors. Stock Options Recipients of stock options can purchase shares of the Company’s common stock at a price equal to the stock's fair market value on the grant date, determined by the closing price of the Company's common stock on the grant date. Stock options vest over a two vesting first grant vesting period service The following table summarizes stock option transactions for the nine months ended September 30, 2021: Number of shares Weighted-average exercise price Weighted average remaining contractual term (in years) Aggregate intrinsic value (in thousands) Outstanding at January 1, 2021 1,008,648 $ 23.92 8.43 $ 66,028 Options granted 72,063 94.76 Options exercised (112,819) 16.38 Options canceled (15,366) 84.78 Outstanding at September 30, 2021 952,526 $ 29.19 7.80 $ 50,981 Vested and Exercisable at September 30, 2021 610,568 $ 18.58 7.59 $ 38,171 As of September 30, 2021, the Company had approximately $3.8 million of total unrecognized stock-based compensation expense related to stock options expected to be recognized over a weighted-average period of 2.04 years. The fair value of each option granted during the nine months ended September 30, 2021 was estimated on the grant date using the Black-Scholes option pricing model with the following assumptions: Risk free rate of return (1) 0.57% - 1.15% Expected share price volatility (2) 26.06% - 38.72% Expected life in years (3) 5.89 years Dividend yield (4) 0% (1) Determined based on the U.S. Treasury yield in effect at the time of the grant for zero-coupon U.S. Treasury notes with remaining terms similar to the expected term of the options. (2) Determined based on a blend of the Company’s historic stock price volatility and the historic volatility of a peer group of publicly traded companies. (3) Determined using the “simplified method” for estimating the expected option life, which is the average of the weighted-average vesting period and contractual term of the option as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time its common stock has been publicly traded. (4) Determined to be zero as the Company has not historically issued dividends. July 2021 CEO stock grant On July 15, 2021, the Company granted its CEO 125,000 RSUs and 225,000 PSUs (the “July 2021 grant”) in connection with entrance into an employment agreement lasting through December 31, 2025. The RSUs vest as follows: 25,000 of the shares will vest on each of the first, second third anniversary of the date of grant and the remainder shall vest in equal quarterly installments thereafter over a two-year period, subject to continued service. The PSUs are earned based on the achievement of stock price milestones. If the Company’s stock price reaches and remains at certain milestones for days, the PSUs shall become earned units and will vest upon continued service as an employee through December 31, 2025 and as an employee and/or director through the fifth anniversary of the grant date. As of September 30, 2021, The RSUs were valued based on the closing price of the Company’s stock on the grant date. The PSUs were valued using a Monte Carlo simulation to account for the market condition within the award. The Company expects to recognize Restricted Stock Units RSUs are valued using the closing price of the Company’s common stock on their grant date. The Company has issued RSUs with vesting periods of one to five years . All vesting is subject to continued service. The following table summarizes RSU transactions for the nine months ended September 30, 2021: Number of shares Weighted-average grant date fair value Outstanding at January 1, 2021 14,734 $ 95.86 Granted 160,729 75.75 Released (5,987) 91.35 Forfeited (1,281) 96.90 Non vested outstanding at September 30, 2021 168,195 $ 76.80 As of September 30, 2021, the Company had approximately $11.8 million of total unrecognized stock-based compensation expense related to RSUs expected to be recognized over a weighted-average period of 4.09 years. Performance Stock Units During the nine months ended September 30, 2021, the Company began issuing PSUs to certain employees. The Company issues PSUs with a combination of service, performance, and market conditions. The majority of PSUs were issued pursuant to the July 2021 grant, as described above. For other PSU grants, vesting of PSUs requires a period of future service and the number of shares that vest depends on performance relative to predetermined targets of the Company’s Gross Written Premiums and Adjusted Return on Equity as set by the Compensation Committee. The PSU’s performance period is the fiscal year of the grant. At the end of the performance period, the actual results will be measured against the predetermined targets to determine the number of PSUs to be earned as compensation. The earned PSUs are then subject to a required service period of approximately three years from the grant date before vesting and being issued as common stock. The following table summarizes PSU transactions for the nine months ended September 30, 2021: Number of shares Weighted-average grant date fair value Outstanding at January 1, 2021 — $ — Granted 233,658 34.45 Vested — — Forfeited (206) 97.87 Non vested outstanding at September 30, 2021 233,452 $ 34.40 The PSU grants above represent the number of shares that would vest based on achievement of all stock price milestones in the July 2021 grant and the 100% achievement of the predetermined performance and market conditions for the other PSU grants. The actual number of PSUs which will vest is subject to adjustment based on the Company’s actual stock price performance and financial performance relative to the predetermined targets. As of September 30, 2021, the Company had approximately $7.5 million of total unrecognized stock-based compensation expense related to PSUs expected to be recognized over a weighted-average period of 4.70 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 9,793 shares pursuant to the ESPP during the nine months ended September 30, 2021. Share repurchases On March 29, 2021, the Company’s Board of Directors approved the adoption of a share repurchase program which became effective March 31, 2021. The program authorizes the repurchase by the Company of up to $40 million of its outstanding shares of common stock through the period ending on March 31, 2023. Under the share repurchase program, shares may be repurchased from time to time in the open market or negotiated transactions at prevailing market rates, or by other means in accordance with federal securities laws. The Company purchased 239,096 shares for $15.8 million under this program during the nine months ended September 30, 2021. The Company accounts for share repurchases by charging the excess of repurchase price over the common stock’s par value entirely to retained earnings. All repurchased shares are retired and become authorized but unissued shares. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Income | 9 Months Ended |
Sep. 30, 2021 | |
Accumulated Other Comprehensive Income | |
Accumulated Other Comprehensive Income | 6. Accumulated Other Comprehensive Income Changes in accumulated other comprehensive income (“AOCI”) are as follows: Nine Months Ended September 30, 2021 2020 (in thousands) Beginning Balance $ 13,246 $ 4,686 Other comprehensive income before reclassification (6,177) 7,494 Federal income tax expense 1,297 (1,573) Other comprehensive income before reclassification, net of tax (4,880) 5,921 Amounts reclassified from AOCI (334) (214) Federal income tax expense 70 45 Amounts reclassified from AOCI, net of tax (264) (169) Other comprehensive income (5,144) 5,752 Balance at end of period $ 8,102 $ 10,438 |
Underwriting Information
Underwriting Information | 9 Months Ended |
Sep. 30, 2021 | |
Underwriting Information | |
Underwriting Information | 7. Underwriting Information The Company has a single reportable segment and offers primarily earthquake, wind, inland marine, and flood insurance products. Gross written premiums (“GWP”) by product are presented below: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 ($ in thousands) ($ in thousands) % of % of % of % of Amount GWP Amount GWP Amount GWP Amount GWP Product Residential Earthquake $ 50,075 32.9 % $ 40,507 39.3 % $ 128,165 33.3 % $ 103,503 40.1 % Commercial Earthquake 27,433 18.0 % 18,061 17.5 % 66,052 17.1 % 40,727 15.8 % Specialty Homeowners 19,881 13.1 % 17,048 16.6 % 53,018 13.8 % 38,461 14.9 % Inland Marine 19,532 12.8 % 4,406 4.3 % 39,047 10.1 % 9,747 3.8 % Hawaii Hurricane 8,996 5.9 % 4,360 4.2 % 22,921 5.9 % 10,296 4.0 % Commercial All Risk 6,867 4.5 % 12,467 12.1 % 30,032 7.8 % 39,765 15.4 % Residential Flood 3,228 2.1 % 2,170 2.1 % 8,377 2.2 % 5,728 2.2 % Other 16,320 10.7 % 3,948 3.9 % 37,655 9.8 % 10,041 3.8 % Total Gross Written Premiums $ 152,332 100.0 % $ 102,967 100.0 % $ 385,267 100.0 % $ 258,268 100.0 % Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 ($ in thousands) ($ in thousands) % of % of % of % of Amount GWP Amount GWP Amount GWP Amount GWP State California $ 72,505 47.6 % $ 52,960 51.4 % $ 180,142 46.8 % $ 124,131 48.1 % Texas 19,715 13.0 % 20,460 19.9 % 48,142 12.5 % 55,047 21.3 % Hawaii 10,342 6.8 % 5,097 5.0 % 26,312 6.8 % 11,990 4.6 % Florida 7,203 4.7 % 685 0.7 % 24,958 6.5 % 685 0.3 % Washington 7,180 4.7 % 4,340 4.2 % 15,931 4.1 % 10,002 3.9 % Oregon 3,964 2.6 % 2,912 2.8 % 9,686 2.5 % 7,298 2.8 % North Carolina 3,719 2.4 % 2,839 2.8 % 11,871 3.1 % 7,131 2.8 % Illinois 2,893 1.9 % 1,575 1.5 % 8,668 2.2 % 4,416 1.7 % Other 24,811 16.3 % 12,099 11.7 % 59,557 15.5 % 37,568 14.5 % Total Gross Written Premiums $ 152,332 100.0 % $ 102,967 100.0 % $ 385,267 100.0 % $ 258,268 100.0 % Gross written premiums by insurance subsidiary are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 ($ in thousands) ($ in thousands) % of % of % of % of Amount GWP Amount GWP Amount GWP Amount GWP Subsidiary PSIC $ 110,875 72.8 % $ 93,987 91.3 % $ 285,991 74.2 % $ 249,288 96.5 % PESIC 41,457 27.2 % 8,980 8.7 % 99,276 25.8 % 8,980 3.5 % Total Gross Written Premiums $ 152,332 100.0 % $ 102,967 100.0 % $ 385,267 100.0 % $ 258,268 100.0 % |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2021 | |
Income Taxes | |
Income Taxes | 8. Income Taxes The Company calculates its tax provision in interim periods using its best estimate of the effective tax rate expected for the full year. The tax rate for the three and nine months ended September 30, 2021 and 2020 differs from the statutory rate of 21% due primarily to the tax impact of the permanent component of employee stock option exercises. |
Earnings Per Share
Earnings Per Share | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share | |
Earnings Per Share | 9. Earnings Per Share The following table sets out earnings per share of common stock: Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 (in thousands, except shares and per share data) (in thousands, except shares and per share data) Net income (loss) $ 246 $ (15,685) $ 29,215 $ 8,102 Weighted average common shares outstanding: Basic 25,388,630 25,492,274 25,473,006 24,654,722 Common Share equivalents 655,050 — 660,658 729,796 Diluted 26,043,680 25,492,274 26,133,664 25,384,518 Earnings per share: Basic $ 0.01 $ (0.62) $ 1.15 $ 0.33 Diluted $ 0.01 $ (0.62) $ 1.12 $ 0.32 Common share equivalents relate primarily to outstanding stock options, RSUs and PSUs under the 2019 Plan and unpurchased shares under the 2019 ESPP and are calculated using the treasury stock method. For the three months ended September 30, 2020, there were 761,337 common share equivalents excluded from the calculation of diluted earnings per share as their effects were anti-dilutive due to the net loss reported in this period. |
Reinsurance
Reinsurance | 9 Months Ended |
Sep. 30, 2021 | |
Reinsurance | |
Reinsurance | 10. Reinsurance The Company utilizes reinsurance in order to limit its exposure to losses and enable it to underwrite policies with sufficient limits to meet policyholder needs. The Company utilizes both excess of loss (XOL) and quota share reinsurance. As of September 30, 2021, the Company’s catastrophe event retention is $12.5 million for all perils. As of September 30, 2021, the Company’s XOL reinsurance structure provides protection up to $1.68 billion for earthquake events and $700 million for hurricane events. In addition to reinsurance purchased from traditional reinsurers, the Company has historically incorporated collateralized protection from the insurance linked securities market (e.g. catastrophe bonds). During the first quarter of 2021, the Company closed a $400 million 144A catastrophe bond which became effective June 1, 2021. The catastrophe bond was completed through Torrey Pines Re Pte. Ltd. (“Torrey Pines Re”). Torrey Pines Re. is a special purpose insurer established in Singapore whereby Torrey Pines Re provides Palomar with indemnity-based reinsurance covering earthquake events. |
Summary of Operations and Bas_2
Summary of Operations and Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Summary of Operations and Basis of Presentation | |
Summary of Operations | Summary of Operations Palomar Holdings, Inc. (the “Company”) is a Delaware incorporated insurance holding company that was founded in 2014. The Company has several wholly owned subsidiaries including an Oregon domiciled insurance company, Palomar Specialty Insurance Company (“PSIC”), a Bermuda based reinsurance company, Palomar Specialty Reinsurance Company Bermuda Ltd. (“PSRE”), an Arizona domiciled surplus lines insurance company, Palomar Excess and Surplus Insurance Company (“PESIC”), and a California domiciled property and casualty insurance agency, Palomar Insurance Agency, DBA Palomar General Insurance Agency (“PGIA”). |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and include the accounts of the Company and its wholly-owned subsidiaries. These condensed consolidated financial statements do not contain all information and footnotes required by U.S. GAAP for complete consolidated financial statements. For a more complete description of the Company’s business and accounting policies, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 9, 2021 (the “2020 Annual Report on Form 10-K”) In the opinion of management, all adjustments necessary for a fair presentation of the condensed consolidated financial statements have been included. Such adjustments consist only of normal recurring items. Interim results are not necessarily indicative of results of operations for the full year. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the condensed consolidated financial statements and accompanying notes. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed herein. All revisions to accounting estimates are recognized in the period in which the estimates are revised. Significant estimates reflected in the Company’s condensed consolidated financial statements include, but are not limited to, reserves for losses and loss adjustment expenses, reinsurance recoverables on unpaid losses, and the fair values of investments. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently adopted accounting pronouncements Income Taxes In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) Simplifying the Accounting for Income Taxes. 2020. The Company adopted this guidance on January 1, 2021 and adoption did not have a material impact on the consolidated financial statements. |
Investments (Tables)
Investments (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Investments | |
Schedule of available-for-sale investments | Gross Gross Amortized Unrealized Unrealized Fair September 30, 2021 Cost or Cost Gains Losses Value (in thousands) Fixed maturities: U.S. Governments $ 18,965 $ 461 $ (115) $ 19,311 States, territories, and possessions 6,171 348 (118) 6,401 Political subdivisions 1,494 94 — 1,588 Special revenue excluding mortgage/asset-backed securities 43,376 1,228 (174) 44,430 Corporate and other 248,480 7,751 (1,131) 255,100 Mortgage/asset-backed securities 79,469 1,849 (102) 81,216 Total available-for-sale investments $ 397,955 $ 11,731 $ (1,640) $ 408,046 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 Corporate and other 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 |
Schedule of aggregate fair value and gross unrealized losses | Less Than 12 Months More Than 12 Months Total Fair Unrealized Fair Unrealized Fair Unrealized September 30, 2021 Value Losses Value Losses Value Losses (in thousands) Fixed maturity securities: U.S. Governments $ 7,018 $ (105) $ 490 $ (10) $ 7,508 $ (115) States, territories, and possessions 3,236 (118) — — 3,236 (118) Political subdivisions — — — — — — Special revenue excluding mortgage/asset-backed securities 13,593 (174) — — 13,593 (174) Corporate and other 70,182 (799) 5,688 (332) 75,870 (1,131) Mortgage/asset-backed securities 9,628 (79) 2,443 (23) 12,071 (102) Total $ 103,657 $ (1,275) $ 8,621 $ (365) $ 112,278 $ (1,640) 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) Corporate and other 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) |
Schedule of contractual maturities of available-for-sale securities | Amortized Fair Cost Value (in thousands) Due within one year $ 27,733 $ 27,927 Due after one year through five years 134,550 137,757 Due after five years through ten years 112,259 116,275 Due after ten years 43,944 44,871 Mortgage and asset-backed securities 79,469 81,216 $ 397,955 $ 408,046 |
Schedule of net investment income | Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 (in thousands) (in thousands) Interest income $ 2,254 $ 2,149 $ 6,755 $ 6,242 Dividend income 104 109 261 354 Investment expense (122) (120) (367) (309) Net investment income $ 2,236 $ 2,138 $ 6,649 $ 6,287 |
Schedule of net realized and unrealized investment gains and losses | Three Months Ended Nine Months Ended September 30, September 30, 2021 2020 2021 2020 (in thousands) (in thousands) Realized gains: Gains on sales of fixed maturity securities $ 117 $ 66 $ 335 $ 256 Gains on sales of equity securities 188 59 1,416 57 Total realized gains 305 125 1,751 313 Realized losses: Losses on sales of fixed maturity securities — — (1) (44) Losses on sales of equity securities — — — — Total realized losses — — (1) (44) Net realized investment gains 305 125 1,750 269 Net unrealized gains (losses) on equity securities (618) (101) (2,502) 974 Net realized and unrealized gains (losses) on investments $ (313) $ 24 $ (752) $ 1,243 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Fair Value Measurements | |
Schedule of hierarchy for financial assets and liabilities measured at fair value | September 30, 2021 Level 1 Level 2 Level 3 Total (in thousands) Assets: Fixed maturity securities U.S. Governments $ — $ 19,311 $ — $ 19,311 States, territories, and possessions — 6,401 — 6,401 Political subdivisions — 1,588 — 1,588 Special revenue excluding mortgage/asset-backed securities — 44,430 — 44,430 Corporate and other — 255,100 — 255,100 Mortgage/asset-backed securities — 81,216 — 81,216 Equity securities 17,358 — — 17,358 Cash, cash equivalents, and restricted cash 41,634 — — 41,634 Total assets $ 58,992 $ 408,046 $ — $ 467,038 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 Corporate and other — 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 |
Reserve for Losses and Loss A_2
Reserve for Losses and Loss Adjustment Expenses (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Reserve for Losses and Loss Adjustment Expenses | |
Schedule of reconciliation of changes in the ending reserve balances for losses and loss adjustment expenses ("LAE") | Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 (in thousands) (in thousands) Reserve for losses and LAE net of reinsurance recoverables at beginning of period $ 23,633 $ 7,087 $ 34,470 $ 3,869 Add: Incurred losses and LAE, net of reinsurance, related to: Current year 28,286 40,803 34,202 46,867 Prior years 189 257 (2,914) 34 Total incurred 28,475 41,060 31,288 46,901 Deduct: Loss and LAE payments, net of reinsurance, related to: Current year 2,787 8,232 3,407 9,754 Prior years 2,678 375 15,708 1,476 Total payments 5,465 8,607 19,115 11,230 Reserve for losses and LAE net of reinsurance recoverables at end of period 46,643 39,540 46,643 39,540 Add: Reinsurance recoverables on unpaid losses and LAE at end of period 129,044 92,537 129,044 92,537 Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at end of period $ 175,687 $ 132,077 $ 175,687 $ 132,077 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Stockholders' Equity | |
Schedule of common stock reserved for future issuance | Stock options outstanding under 2019 Equity Incentive Plan 952,526 Restricted stock units outstanding under 2019 Equity Incentive Plan 168,195 Performance stock units outstanding under 2019 Equity Incentive Plan, at target 233,452 Shares authorized for future issuance under 2019 Equity Incentive Plan 2,259,725 Shares authorized for future issuance under 2019 Employee Stock Purchase Plan 681,840 Total 4,295,738 |
Schedule of stock-based compensation expense | Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 (in thousands) (in thousands) Stock-Based Compensation $ 1,525 $ 551 $ 3,370 $ 1,457 |
Schedule of stock option transactions | Number of shares Weighted-average exercise price Weighted average remaining contractual term (in years) Aggregate intrinsic value (in thousands) Outstanding at January 1, 2021 1,008,648 $ 23.92 8.43 $ 66,028 Options granted 72,063 94.76 Options exercised (112,819) 16.38 Options canceled (15,366) 84.78 Outstanding at September 30, 2021 952,526 $ 29.19 7.80 $ 50,981 Vested and Exercisable at September 30, 2021 610,568 $ 18.58 7.59 $ 38,171 |
Schedule of fair value of each option granted was estimated on the grant date using the Black-Scholes option pricing model | Risk free rate of return (1) 0.57% - 1.15% Expected share price volatility (2) 26.06% - 38.72% Expected life in years (3) 5.89 years Dividend yield (4) 0% (1) Determined based on the U.S. Treasury yield in effect at the time of the grant for zero-coupon U.S. Treasury notes with remaining terms similar to the expected term of the options. (2) Determined based on a blend of the Company’s historic stock price volatility and the historic volatility of a peer group of publicly traded companies. (3) Determined using the “simplified method” for estimating the expected option life, which is the average of the weighted-average vesting period and contractual term of the option as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due to the limited period of time its common stock has been publicly traded. (4) Determined to be zero as the Company has not historically issued dividends. |
Schedule of RSU transactions | Number of shares Weighted-average grant date fair value Outstanding at January 1, 2021 14,734 $ 95.86 Granted 160,729 75.75 Released (5,987) 91.35 Forfeited (1,281) 96.90 Non vested outstanding at September 30, 2021 168,195 $ 76.80 |
Schedule of Performance stock unit transactions | Number of shares Weighted-average grant date fair value Outstanding at January 1, 2021 — $ — Granted 233,658 34.45 Vested — — Forfeited (206) 97.87 Non vested outstanding at September 30, 2021 233,452 $ 34.40 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Accumulated Other Comprehensive Income | |
Schedule of changes in accumulated other comprehensive income (AOCI) | Nine Months Ended September 30, 2021 2020 (in thousands) Beginning Balance $ 13,246 $ 4,686 Other comprehensive income before reclassification (6,177) 7,494 Federal income tax expense 1,297 (1,573) Other comprehensive income before reclassification, net of tax (4,880) 5,921 Amounts reclassified from AOCI (334) (214) Federal income tax expense 70 45 Amounts reclassified from AOCI, net of tax (264) (169) Other comprehensive income (5,144) 5,752 Balance at end of period $ 8,102 $ 10,438 |
Underwriting Information (Table
Underwriting Information (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Underwriting Information | |
Schedule of gross written premiums | The Company has a single reportable segment and offers primarily earthquake, wind, inland marine, and flood insurance products. Gross written premiums (“GWP”) by product are presented below: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 ($ in thousands) ($ in thousands) % of % of % of % of Amount GWP Amount GWP Amount GWP Amount GWP Product Residential Earthquake $ 50,075 32.9 % $ 40,507 39.3 % $ 128,165 33.3 % $ 103,503 40.1 % Commercial Earthquake 27,433 18.0 % 18,061 17.5 % 66,052 17.1 % 40,727 15.8 % Specialty Homeowners 19,881 13.1 % 17,048 16.6 % 53,018 13.8 % 38,461 14.9 % Inland Marine 19,532 12.8 % 4,406 4.3 % 39,047 10.1 % 9,747 3.8 % Hawaii Hurricane 8,996 5.9 % 4,360 4.2 % 22,921 5.9 % 10,296 4.0 % Commercial All Risk 6,867 4.5 % 12,467 12.1 % 30,032 7.8 % 39,765 15.4 % Residential Flood 3,228 2.1 % 2,170 2.1 % 8,377 2.2 % 5,728 2.2 % Other 16,320 10.7 % 3,948 3.9 % 37,655 9.8 % 10,041 3.8 % Total Gross Written Premiums $ 152,332 100.0 % $ 102,967 100.0 % $ 385,267 100.0 % $ 258,268 100.0 % Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 ($ in thousands) ($ in thousands) % of % of % of % of Amount GWP Amount GWP Amount GWP Amount GWP State California $ 72,505 47.6 % $ 52,960 51.4 % $ 180,142 46.8 % $ 124,131 48.1 % Texas 19,715 13.0 % 20,460 19.9 % 48,142 12.5 % 55,047 21.3 % Hawaii 10,342 6.8 % 5,097 5.0 % 26,312 6.8 % 11,990 4.6 % Florida 7,203 4.7 % 685 0.7 % 24,958 6.5 % 685 0.3 % Washington 7,180 4.7 % 4,340 4.2 % 15,931 4.1 % 10,002 3.9 % Oregon 3,964 2.6 % 2,912 2.8 % 9,686 2.5 % 7,298 2.8 % North Carolina 3,719 2.4 % 2,839 2.8 % 11,871 3.1 % 7,131 2.8 % Illinois 2,893 1.9 % 1,575 1.5 % 8,668 2.2 % 4,416 1.7 % Other 24,811 16.3 % 12,099 11.7 % 59,557 15.5 % 37,568 14.5 % Total Gross Written Premiums $ 152,332 100.0 % $ 102,967 100.0 % $ 385,267 100.0 % $ 258,268 100.0 % Gross written premiums by insurance subsidiary are as follows: Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 ($ in thousands) ($ in thousands) % of % of % of % of Amount GWP Amount GWP Amount GWP Amount GWP Subsidiary PSIC $ 110,875 72.8 % $ 93,987 91.3 % $ 285,991 74.2 % $ 249,288 96.5 % PESIC 41,457 27.2 % 8,980 8.7 % 99,276 25.8 % 8,980 3.5 % Total Gross Written Premiums $ 152,332 100.0 % $ 102,967 100.0 % $ 385,267 100.0 % $ 258,268 100.0 % |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share | |
Schedule of earnings per share of common stock | Three months ended September 30, Nine months ended September 30, 2021 2020 2021 2020 (in thousands, except shares and per share data) (in thousands, except shares and per share data) Net income (loss) $ 246 $ (15,685) $ 29,215 $ 8,102 Weighted average common shares outstanding: Basic 25,388,630 25,492,274 25,473,006 24,654,722 Common Share equivalents 655,050 — 660,658 729,796 Diluted 26,043,680 25,492,274 26,133,664 25,384,518 Earnings per share: Basic $ 0.01 $ (0.62) $ 1.15 $ 0.33 Diluted $ 0.01 $ (0.62) $ 1.12 $ 0.32 |
Investments - Available for Sal
Investments - Available for Sale Investments (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Available for sale investments | ||
Amortized Cost | $ 397,955 | $ 381,279 |
Gross Unrealized Gains | 11,731 | 17,221 |
Gross Unrealized Losses | (1,640) | (513) |
Fair Value | 408,046 | 397,987 |
U.S. Governments | ||
Available for sale investments | ||
Amortized Cost | 18,965 | 16,308 |
Gross Unrealized Gains | 461 | 756 |
Gross Unrealized Losses | (115) | (5) |
Fair Value | 19,311 | 17,059 |
States, territories, and possessions | ||
Available for sale investments | ||
Amortized Cost | 6,171 | 6,208 |
Gross Unrealized Gains | 348 | 428 |
Gross Unrealized Losses | (118) | |
Fair Value | 6,401 | 6,636 |
Political subdivisions | ||
Available for sale investments | ||
Amortized Cost | 1,494 | 2,027 |
Gross Unrealized Gains | 94 | 125 |
Fair Value | 1,588 | 2,152 |
Special revenue excluding mortgage/asset-backed securities | ||
Available for sale investments | ||
Amortized Cost | 43,376 | 39,704 |
Gross Unrealized Gains | 1,228 | 1,525 |
Gross Unrealized Losses | (174) | (2) |
Fair Value | 44,430 | 41,227 |
Corporate and other | ||
Available for sale investments | ||
Amortized Cost | 248,480 | 234,049 |
Gross Unrealized Gains | 7,751 | 11,602 |
Gross Unrealized Losses | (1,131) | (291) |
Fair Value | 255,100 | 245,360 |
Mortgage/asset-backed securities | ||
Available for sale investments | ||
Amortized Cost | 79,469 | 82,983 |
Gross Unrealized Gains | 1,849 | 2,785 |
Gross Unrealized Losses | (102) | (215) |
Fair Value | $ 81,216 | $ 85,553 |
Investments - Security Holdings
Investments - Security Holdings in an Unrealized Loss Position - General Information (Details) $ in Thousands | Sep. 30, 2021USD ($)security | Dec. 31, 2020USD ($)security |
Number of positions: | ||
Number of unrealized loss positions | security | 153 | 90 |
Fair Value | ||
Fair Value | $ 112,278 | $ 41,525 |
Unrealized Losses | ||
Unrealized Losses | $ 1,640 | $ 513 |
Investments - Security Holdin_2
Investments - Security Holdings in an Unrealized Loss Position - Tabular Disclosure (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Fair Value | ||
Fair Value - Less Than 12 Months | $ 103,657 | $ 40,826 |
Fair Value - More Than 12 Months | 8,621 | 699 |
Fair Value - Total | 112,278 | 41,525 |
Unrealized Losses | ||
Unrealized Losses - Less Than 12 Months | (1,275) | (452) |
Unrealized Losses - More Than 12 Months | (365) | (61) |
Unrealized Losses - Total | (1,640) | (513) |
U.S. Governments | ||
Fair Value | ||
Fair Value - Less Than 12 Months | 7,018 | 1,496 |
Fair Value - More Than 12 Months | 490 | |
Fair Value - Total | 7,508 | 1,496 |
Unrealized Losses | ||
Unrealized Losses - Less Than 12 Months | (105) | (5) |
Unrealized Losses - More Than 12 Months | (10) | |
Unrealized Losses - Total | (115) | (5) |
States, territories, and possessions | ||
Fair Value | ||
Fair Value - Less Than 12 Months | 3,236 | |
Fair Value - Total | 3,236 | |
Unrealized Losses | ||
Unrealized Losses - Less Than 12 Months | (118) | |
Unrealized Losses - Total | (118) | |
Special revenue excluding mortgage/asset-backed securities | ||
Fair Value | ||
Fair Value - Less Than 12 Months | 13,593 | 520 |
Fair Value - Total | 13,593 | 520 |
Unrealized Losses | ||
Unrealized Losses - Less Than 12 Months | (174) | (2) |
Unrealized Losses - Total | (174) | (2) |
Corporate and other | ||
Fair Value | ||
Fair Value - Less Than 12 Months | 70,182 | 22,718 |
Fair Value - More Than 12 Months | 5,688 | 203 |
Fair Value - Total | 75,870 | 22,921 |
Unrealized Losses | ||
Unrealized Losses - Less Than 12 Months | (799) | (234) |
Unrealized Losses - More Than 12 Months | (332) | (57) |
Unrealized Losses - Total | (1,131) | (291) |
Mortgage/asset-backed securities | ||
Fair Value | ||
Fair Value - Less Than 12 Months | 9,628 | 16,092 |
Fair Value - More Than 12 Months | 2,443 | 496 |
Fair Value - Total | 12,071 | 16,588 |
Unrealized Losses | ||
Unrealized Losses - Less Than 12 Months | (79) | (211) |
Unrealized Losses - More Than 12 Months | (23) | (4) |
Unrealized Losses - Total | $ (102) | $ (215) |
Investments - Contractual Matur
Investments - Contractual Maturities of Available for Sale Fixed Maturity Securities (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Amortized Cost | ||
Due within one year | $ 27,733 | |
Due after one year through five years | 134,550 | |
Due after five years through ten years | 112,259 | |
Due after ten years | 43,944 | |
Mortgage and asset-backed securities | 79,469 | |
Amortized Cost | 397,955 | $ 381,279 |
Fair Value | ||
Due within one year | 27,927 | |
Due after one year through five years | 137,757 | |
Due after five years through ten years | 116,275 | |
Due after ten years | 44,871 | |
Mortgage and asset-backed securities | 81,216 | |
Fair Value | $ 408,046 | $ 397,987 |
Investments - Net Investment In
Investments - Net Investment Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Net investment income | ||||
Interest income | $ 2,254 | $ 2,149 | $ 6,755 | $ 6,242 |
Dividend income | 104 | 109 | 261 | 354 |
Investment expense | (122) | (120) | (367) | (309) |
Net investment income | $ 2,236 | $ 2,138 | $ 6,649 | $ 6,287 |
Investments - Net Realized and
Investments - Net Realized and Unrealized Investment Gains and Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Net realized and unrealized investment gains and losses | ||||
Gains on sales of fixed maturity securities | $ 117 | $ 66 | $ 335 | $ 256 |
Gains on sales of equity securities | 188 | 59 | 1,416 | 57 |
Total realized gains | 305 | 125 | 1,751 | 313 |
Losses on sales of fixed maturity securities | (1) | (44) | ||
Total realized losses | (1) | (44) | ||
Net realized investment gains | 305 | 125 | 1,750 | 269 |
Net unrealized gains (losses) on equity securities | (618) | (101) | (2,502) | 974 |
Net realized and unrealized gains (losses) on investments | $ (313) | $ 24 | (752) | 1,243 |
Proceeds from sales of fixed maturity securities | ||||
Proceeds from the sale of fixed maturity securities | $ 12,100 | $ 29,200 |
Investments - Securities on Dep
Investments - Securities on Deposit (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Investments | ||
Fair Value | $ 408,046 | $ 397,987 |
Securities on deposit with state regulatory authorities | ||
Investments | ||
Fair Value | $ 7,500 | $ 7,500 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Assets: | ||
Fair Value | $ 408,046 | $ 397,987 |
Equity securities at fair value | 17,358 | 24,322 |
U.S. Governments | ||
Assets: | ||
Fair Value | 19,311 | 17,059 |
States, territories, and possessions | ||
Assets: | ||
Fair Value | 6,401 | 6,636 |
Political subdivisions | ||
Assets: | ||
Fair Value | 1,588 | 2,152 |
Special revenue excluding mortgage/asset-backed securities | ||
Assets: | ||
Fair Value | 44,430 | 41,227 |
Corporate and other | ||
Assets: | ||
Fair Value | 255,100 | 245,360 |
Mortgage/asset-backed securities | ||
Assets: | ||
Fair Value | 81,216 | 85,553 |
Fair Value, Measurements, Recurring | ||
Assets: | ||
Equity securities at fair value | 17,358 | 24,322 |
Cash, cash equivalents, and restricted cash | 41,634 | 33,786 |
Total assets | 467,038 | 456,095 |
Fair Value, Measurements, Recurring | U.S. Governments | ||
Assets: | ||
Fair Value | 19,311 | 17,059 |
Fair Value, Measurements, Recurring | States, territories, and possessions | ||
Assets: | ||
Fair Value | 6,401 | 6,636 |
Fair Value, Measurements, Recurring | Political subdivisions | ||
Assets: | ||
Fair Value | 1,588 | 2,152 |
Fair Value, Measurements, Recurring | Special revenue excluding mortgage/asset-backed securities | ||
Assets: | ||
Fair Value | 44,430 | 41,227 |
Fair Value, Measurements, Recurring | Corporate and other | ||
Assets: | ||
Fair Value | 255,100 | 245,360 |
Fair Value, Measurements, Recurring | Mortgage/asset-backed securities | ||
Assets: | ||
Fair Value | 81,216 | 85,553 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | ||
Assets: | ||
Equity securities at fair value | 17,358 | 24,322 |
Cash, cash equivalents, and restricted cash | 41,634 | 33,786 |
Total assets | 58,992 | 58,108 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | ||
Assets: | ||
Total assets | 408,046 | 397,987 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | U.S. Governments | ||
Assets: | ||
Fair Value | 19,311 | 17,059 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | States, territories, and possessions | ||
Assets: | ||
Fair Value | 6,401 | 6,636 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Political subdivisions | ||
Assets: | ||
Fair Value | 1,588 | 2,152 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Special revenue excluding mortgage/asset-backed securities | ||
Assets: | ||
Fair Value | 44,430 | 41,227 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Corporate and other | ||
Assets: | ||
Fair Value | 255,100 | 245,360 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Mortgage/asset-backed securities | ||
Assets: | ||
Fair Value | $ 81,216 | $ 85,553 |
Fair Value Measurements - Trans
Fair Value Measurements - Transfers (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Fair Value Measurements | ||
Fair value, assets, transfers out of Level 3 | $ 0 | $ 0 |
Reserve for Losses and Loss A_3
Reserve for Losses and Loss Adjustment Expenses - Roll Forward (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Reserve for Losses and Loss Adjustment Expenses | ||||
Reserve for losses and LAE net of reinsurance recoverables at beginning of period | $ 23,633 | $ 7,087 | $ 34,470 | $ 3,869 |
Add: Incurred losses and LAE, net of reinsurance, related to: | ||||
Current year | 28,286 | 40,803 | 34,202 | 46,867 |
Prior years | 189 | 257 | (2,914) | 34 |
Total incurred | 28,475 | 41,060 | 31,288 | 46,901 |
Deduct: Loss and LAE payments, net of reinsurance, related to: | ||||
Current year, net | 2,787 | |||
Current year | 8,232 | 3,407 | 9,754 | |
Prior years | 2,678 | 375 | 15,708 | 1,476 |
Total payments | 5,465 | 8,607 | 19,115 | 11,230 |
Reserve for losses and LAE net of reinsurance recoverables at end of period | $ 46,643 | $ 39,540 | $ 46,643 | $ 39,540 |
Reserve for Losses and Loss A_4
Reserve for Losses and Loss Adjustment Expenses - Total (Details) - USD ($) $ in Thousands | Sep. 30, 2021 | Jun. 30, 2021 | Dec. 31, 2020 | Sep. 30, 2020 | Jun. 30, 2020 | Dec. 31, 2019 |
Reserve for Losses and Loss Adjustment Expenses | ||||||
Total reserve for losses and LAE | $ 46,643 | $ 23,633 | $ 34,470 | $ 39,540 | $ 7,087 | $ 3,869 |
Add: Reinsurance recoverables on unpaid losses and LAE at end of period | 129,044 | 94,566 | 92,537 | |||
Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at end of period | $ 175,687 | $ 129,036 | $ 132,077 |
Reserve for Losses and Loss A_5
Reserve for Losses and Loss Adjustment Expenses - Adverse (Favorable) Development (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Adverse (Favorable) Development | ||||
Adverse (favorable) prior year development | $ 189 | $ 257 | $ (2,914) | $ 34 |
Stockholders' Equity - Reserved
Stockholders' Equity - Reserved for Future Issuance (Details) - shares | Sep. 30, 2021 | Dec. 31, 2020 | Apr. 16, 2019 |
Common stock reserved for future issuance | |||
Stock options outstanding (in shares) | 952,526 | 1,008,648 | |
Total (in shares) | 4,295,738 | ||
2019 Equity Incentive Plan | |||
Common stock reserved for future issuance | |||
Stock options outstanding (in shares) | 952,526 | ||
Shares authorized for future issuance (in shares) | 2,259,725 | 2,400,000 | |
2019 Employee Stock Purchase Plan | |||
Common stock reserved for future issuance | |||
Shares authorized for future issuance (in shares) | 681,840 | ||
Restricted Stock Units | |||
Common stock reserved for future issuance | |||
Stock units outstanding (in shares) | 168,195 | 14,734 | |
Restricted Stock Units | 2019 Equity Incentive Plan | |||
Common stock reserved for future issuance | |||
Stock units outstanding (in shares) | 168,195 | ||
Performance Stock Units | |||
Common stock reserved for future issuance | |||
Stock units outstanding (in shares) | 233,452 | ||
Performance Stock Units | 2019 Equity Incentive Plan | |||
Common stock reserved for future issuance | |||
Stock units outstanding (in shares) | 233,452 |
Stockholders' Equity - Stock-ba
Stockholders' Equity - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Stockholders' Equity | ||||
Stock-based compensation expense | $ 1,525 | $ 551 | $ 3,370 | $ 1,457 |
Stockholders' Equity - 2019 Equ
Stockholders' Equity - 2019 Equity Incentive Plan (Details) - 2019 Equity Incentive Plan - shares | Sep. 30, 2021 | Apr. 16, 2019 |
Stock-Based Compensation | ||
Shares authorized (in shares) | 2,259,725 | 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 - Stock Op
Stockholders' Equity - Stock Options -Vesting (Details) | 9 Months Ended |
Sep. 30, 2021 | |
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 | Minimum | |
Stock-Based Compensation | |
Vesting period | 1 year |
Restricted Stock Units | Maximum | |
Stock-Based Compensation | |
Vesting period | 5 years |
Stockholders' Equity - Stock _2
Stockholders' Equity - Stock Options - Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Number of shares | ||
Outstanding at beginning of period (in shares) | 1,008,648 | |
Granted (in shares) | 72,063 | |
Exercised (in shares) | (112,819) | |
Canceled (in shares) | (15,366) | |
Outstanding at end of period (in shares) | 952,526 | 1,008,648 |
Weighted-average exercise price | ||
Outstanding at beginning of period (in dollars per share) | $ 23.92 | |
Granted (in dollars per share) | 94.76 | |
Exercised (in dollars per share) | 16.38 | |
Canceled (in dollars per share) | 84.78 | |
Outstanding at end of period (in dollars per share) | $ 29.19 | $ 23.92 |
Additional disclosures | ||
Weighted average remaining contractual term | 7 years 9 months 18 days | 8 years 5 months 4 days |
Aggregate intrinsic value | $ 50,981 | $ 66,028 |
Vested and Exercisable | ||
Vested and exercisable, number (in shares) | 610,568 | |
Vested and exercisable, weighted average exercise price (in dollars per share) | $ 18.58 | |
Vested and exercisable, weighted average remaining contractual term | 7 years 7 months 2 days | |
Vested and exercisable, aggregate intrinsic value | $ 38,171 |
Stockholders' Equity - Stock _3
Stockholders' Equity - Stock Options - Fair Value Assumptions (Details) - Stock Options | 9 Months Ended |
Sep. 30, 2021 | |
Fair value assumptions | |
Risk free rate of return, minimum (as a percent) | 0.57% |
Risk free rate of return, maximum (as a percent) | 1.15% |
Expected share price volatility, minimum (as a percent) | 26.06% |
Expected share price volatility, maximum (as a percent) | 38.72% |
Expected life in years | 5 years 10 months 20 days |
Dividend yield (as a percent) | 0.00% |
Stockholders' Equity - Unrecogn
Stockholders' Equity - Unrecognized Compensation Expense and July 2021 CEO Stock Grant (Details) $ in Millions | Jul. 15, 2021USD ($)Dshares | Sep. 30, 2021USD ($)Milestoneshares |
Unrecognized stock-based compensation expense | ||
Total unrecognized stock-based compensation expense, options | $ | $ 3.8 | |
Weighted-average period over which unrecognized stock-based compensation expense is expected to be recognized | 5 years | |
Award service period | 5 years | |
Stock Options | ||
Unrecognized stock-based compensation expense | ||
Total unrecognized stock-based compensation expense, options | $ | $ 3.8 | |
Weighted-average period over which unrecognized stock-based compensation expense is expected to be recognized | 2 years 14 days | |
Restricted Stock Units | ||
Unrecognized stock-based compensation expense | ||
Total unrecognized stock-based compensation expense, restricted stock units | $ | $ 8.9 | $ 11.8 |
Weighted-average period over which unrecognized stock-based compensation expense is expected to be recognized | 4 years 1 month 2 days | |
Granted (in shares) | 160,729 | |
Restricted stock units vested (in shares) | 5,987 | |
Restricted Stock Units | Share-based Payment Arrangement, Tranche One | ||
Unrecognized stock-based compensation expense | ||
Restricted stock units vested (in shares) | 25,000 | |
Restricted Stock Units | Share-based Payment Arrangement, Tranche Two | ||
Unrecognized stock-based compensation expense | ||
Restricted stock units vested (in shares) | 25,000 | |
Restricted Stock Units | Share-based Payment Arrangement, Tranche Three | ||
Unrecognized stock-based compensation expense | ||
Restricted stock units vested (in shares) | 25,000 | |
Restricted Stock Units | CEO | ||
Unrecognized stock-based compensation expense | ||
Granted (in shares) | 125,000 | |
Performance Stock Units | ||
Unrecognized stock-based compensation expense | ||
Total unrecognized stock-based compensation expense, restricted stock units | $ | $ 7.2 | $ 7.5 |
Weighted-average period over which unrecognized stock-based compensation expense is expected to be recognized | 4 years 8 months 12 days | |
Granted (in shares) | 233,658 | |
Number of days, achievement of milestone stock price | D | 30 | |
Stock price milestones | Milestone | 0 | |
Percentage of predetermined performance achievement | 100.00% | |
Award service period | 3 years | |
Performance Stock Units | CEO | ||
Unrecognized stock-based compensation expense | ||
Granted (in shares) | 225,000 |
Stockholders' Equity - Restrict
Stockholders' Equity - Restricted Stock Units (Details) - Restricted Stock Units | 9 Months Ended |
Sep. 30, 2021$ / sharesshares | |
Number of shares | |
Outstanding at beginning of period (in shares) | shares | 14,734 |
Granted (in shares) | shares | 160,729 |
Vested (in shares) | shares | (5,987) |
Forfeited (in shares) | shares | (1,281) |
Non vested at end of period (in shares) | shares | 168,195 |
Weighted-average grant date fair value | |
Outstanding at beginning of period (in dollars per share) | $ / shares | $ 95.86 |
Granted (in dollars per share) | $ / shares | 75.75 |
Vested (in dollars per share) | $ / shares | 91.35 |
Forfeited (in dollars per share) | $ / shares | 96.90 |
Non vested outstanding at end of period (in dollars per share) | $ / shares | $ 76.80 |
Stockholders' Equity - Performa
Stockholders' Equity - Performance Stock Units (Details) - Performance Stock Units | 9 Months Ended |
Sep. 30, 2021$ / sharesshares | |
Number of shares | |
Granted (in shares) | shares | 233,658 |
Forfeited (in shares) | shares | (206) |
Non vested at end of period (in shares) | shares | 233,452 |
Weighted-average grant date fair value | |
Granted (in dollars per share) | $ / shares | $ 34.45 |
Forfeited (in dollars per share) | $ / shares | 97.87 |
Non vested outstanding at end of period (in dollars per share) | $ / shares | $ 34.40 |
Stockholders' Equity - 2019 Emp
Stockholders' Equity - 2019 Employee Stock Purchase Plan (Details) - shares | 9 Months Ended | |
Sep. 30, 2021 | Apr. 16, 2019 | |
Stock-Based Compensation | ||
Issuance of common stock via employee stock purchase plan (in shares) | 9,793 | |
Employee Stock | ||
Stock-Based Compensation | ||
Shares authorized (in shares) | 240,000 | |
Annual increase (in shares) | 240,000 |
Stockholders' Equity - Share Re
Stockholders' Equity - Share Repurchases (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2021 | Mar. 29, 2021 | |
Stockholders' Equity | ||
Amount of authorizes repurchase | $ 40 | |
Amount of repurchase of shares | $ 15.8 | |
Repurchase of shares (in shares) | 239,096 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Changes in accumulated other comprehensive income | ||
Beginning balance | $ 363,713 | $ 218,556 |
Other comprehensive income | (5,144) | 5,752 |
Ending balance | 377,777 | 361,895 |
Accumulated Other Comprehensive Income (Loss) | ||
Changes in accumulated other comprehensive income | ||
Beginning balance | 13,246 | 4,686 |
Other comprehensive income before reclassification | (6,177) | 7,494 |
Federal income tax expense | 1,297 | (1,573) |
Other comprehensive income before reclassification, net of tax | (4,880) | 5,921 |
Amounts reclassified from AOCI | (334) | (214) |
Federal income tax expense | 70 | 45 |
Amounts reclassified from AOCI, net of tax | (264) | (169) |
Other comprehensive income | (5,144) | 5,752 |
Ending balance | $ 8,102 | $ 10,438 |
Underwriting Information - Repo
Underwriting Information - Reportable Segments (Details) - segment | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Reportable segment | ||||
Number of reportable segments | 1 | 1 | 1 | 1 |
Underwriting Information - Gros
Underwriting Information - Gross Written Premiums by Product (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Gross written premiums | ||||
Amount | $ 152,332 | $ 102,967 | $ 385,267 | $ 258,268 |
% of GWP | 100.00% | 100.00% | 100.00% | 100.00% |
Residential Earthquake | ||||
Gross written premiums | ||||
Amount | $ 50,075 | $ 40,507 | $ 128,165 | $ 103,503 |
% of GWP | 32.90% | 39.30% | 33.30% | 40.10% |
Commercial Earthquake | ||||
Gross written premiums | ||||
Amount | $ 27,433 | $ 18,061 | $ 66,052 | $ 40,727 |
% of GWP | 18.00% | 17.50% | 17.10% | 15.80% |
Specialty Homeowners | ||||
Gross written premiums | ||||
Amount | $ 19,881 | $ 17,048 | $ 53,018 | $ 38,461 |
% of GWP | 13.10% | 16.60% | 13.80% | 14.90% |
Inland Marine | ||||
Gross written premiums | ||||
Amount | $ 19,532 | $ 4,406 | $ 39,047 | $ 9,747 |
% of GWP | 12.80% | 4.30% | 10.10% | 3.80% |
Hawaii Hurricane | ||||
Gross written premiums | ||||
Amount | $ 8,996 | $ 4,360 | $ 22,921 | $ 10,296 |
% of GWP | 5.90% | 4.20% | 5.90% | 4.00% |
Commercial All Risk | ||||
Gross written premiums | ||||
Amount | $ 6,867 | $ 12,467 | $ 30,032 | $ 39,765 |
% of GWP | 4.50% | 12.10% | 7.80% | 15.40% |
Residential Flood | ||||
Gross written premiums | ||||
Amount | $ 3,228 | $ 2,170 | $ 8,377 | $ 5,728 |
% of GWP | 2.10% | 2.10% | 2.20% | 2.20% |
Other | ||||
Gross written premiums | ||||
Amount | $ 16,320 | $ 3,948 | $ 37,655 | $ 10,041 |
% of GWP | 10.70% | 3.90% | 9.80% | 3.80% |
Underwriting Information - Gr_2
Underwriting Information - Gross Written Premiums by State (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Gross written premiums | ||||
Amount | $ 152,332 | $ 102,967 | $ 385,267 | $ 258,268 |
% of GWP | 100.00% | 100.00% | 100.00% | 100.00% |
California | ||||
Gross written premiums | ||||
Amount | $ 72,505 | $ 52,960 | $ 180,142 | $ 124,131 |
% of GWP | 47.60% | 51.40% | 46.80% | 48.10% |
Texas | ||||
Gross written premiums | ||||
Amount | $ 19,715 | $ 20,460 | $ 48,142 | $ 55,047 |
% of GWP | 13.00% | 19.90% | 12.50% | 21.30% |
Hawaii | ||||
Gross written premiums | ||||
Amount | $ 10,342 | $ 5,097 | $ 26,312 | $ 11,990 |
% of GWP | 6.80% | 5.00% | 6.80% | 4.60% |
Florida | ||||
Gross written premiums | ||||
Amount | $ 7,203 | $ 685 | $ 24,958 | $ 685 |
% of GWP | 4.70% | 0.70% | 6.50% | 0.30% |
Washington | ||||
Gross written premiums | ||||
Amount | $ 7,180 | $ 4,340 | $ 15,931 | $ 10,002 |
% of GWP | 4.70% | 4.20% | 4.10% | 3.90% |
Oregon | ||||
Gross written premiums | ||||
Amount | $ 3,964 | $ 2,912 | $ 9,686 | $ 7,298 |
% of GWP | 2.60% | 2.80% | 2.50% | 2.80% |
North Carolina | ||||
Gross written premiums | ||||
Amount | $ 3,719 | $ 2,839 | $ 11,871 | $ 7,131 |
% of GWP | 2.40% | 2.80% | 3.10% | 2.80% |
Illinois | ||||
Gross written premiums | ||||
Amount | $ 2,893 | $ 1,575 | $ 8,668 | $ 4,416 |
% of GWP | 1.90% | 1.50% | 2.20% | 1.70% |
Other States | ||||
Gross written premiums | ||||
Amount | $ 24,811 | $ 12,099 | $ 59,557 | $ 37,568 |
% of GWP | 16.30% | 11.70% | 15.50% | 14.50% |
Underwriting Information - Gr_3
Underwriting Information - Gross Written Premiums by Insurance Subsidiary (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Gross written premiums | ||||
Amount | $ 152,332 | $ 102,967 | $ 385,267 | $ 258,268 |
% of GWP | 100.00% | 100.00% | 100.00% | 100.00% |
PSIC | ||||
Gross written premiums | ||||
Amount | $ 110,875 | $ 93,987 | $ 285,991 | $ 249,288 |
% of GWP | 72.80% | 91.30% | 74.20% | 96.50% |
PESIC | ||||
Gross written premiums | ||||
Amount | $ 41,457 | $ 8,980 | $ 99,276 | $ 8,980 |
% of GWP | 27.20% | 8.70% | 25.80% | 3.50% |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Effective Income Tax Rate Reconciliation, Percent | ||||
Statutory tax rate (as a percent) | 21.00% | 21.00% | 21.00% | 21.00% |
Earnings Per Share - Tabular Di
Earnings Per Share - Tabular Disclosure (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Earnings Per Share | ||||
Net income (loss) | $ 246 | $ (15,685) | $ 29,215 | $ 8,102 |
Net income (loss) - basic | 246 | (15,685) | 29,215 | 8,102 |
Net income (loss) - diluted | $ 246 | $ (15,685) | $ 29,215 | $ 8,102 |
Weighted average common shares outstanding: | ||||
Basic | 25,388,630 | 25,492,274 | 25,473,006 | 24,654,722 |
Common Share equivalents (in shares) | 655,050 | 660,658 | 729,796 | |
Diluted (in shares) | 26,043,680 | 25,492,274 | 26,133,664 | 25,384,518 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.01 | $ (0.62) | $ 1.15 | $ 0.33 |
Earnings per share: | ||||
Diluted (in dollars per share) | $ 0.01 | $ (0.62) | $ 1.12 | $ 0.32 |
Earnings Per Share - Anti-dilut
Earnings Per Share - Anti-dilutive Securities (Details) | 3 Months Ended |
Sep. 30, 2020shares | |
Earnings Per Share | |
Common share equivalents excluded from the calculation of diluted earnings per share (in shares) | 761,337 |
Reinsurance (Details)
Reinsurance (Details) - USD ($) $ in Millions | 9 Months Ended | |
Sep. 30, 2021 | Mar. 31, 2021 | |
Reinsurance Retention Policy | ||
Catastrophe bond, face value | $ 400 | |
Catastrophe | ||
Reinsurance Retention Policy | ||
Retention amount | $ 12.5 | |
Earthquake events | ||
Reinsurance Retention Policy | ||
XOL reinsurance, protection | 1,680 | |
Hurricane Events | ||
Reinsurance Retention Policy | ||
XOL reinsurance, protection | $ 700 |