Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Feb. 27, 2023 | Jun. 30, 2022 | |
Cover [Abstract] | |||
Entity Central Index Key | 0001761312 | ||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
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 | $ 1,564,110,299 | ||
Entity Common Stock, Shares Outstanding | 24,983,441 | ||
Auditor Name | Ernst & Young LLP | ||
Auditor Firm ID | 42 | ||
Auditor Location | San Francisco, California | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Investments: | ||
Fixed maturity securities available for sale, at fair value (amortized cost: $561,580 in 2022; $426,122 in 2021) | $ 515,064 | $ 432,682 |
Equity securities, at fair value (cost: $42,352 in 2022; $31,834 in 2021) | 38,576 | 33,261 |
Total investments | 553,640 | 465,943 |
Cash and cash equivalents | 68,108 | 50,284 |
Restricted cash | 56 | 87 |
Accrued investment income | 3,777 | 2,725 |
Premium receivable | 162,858 | 88,012 |
Deferred policy acquisition costs | 56,740 | 55,953 |
Reinsurance recoverable on paid losses and loss adjustment expenses | 39,718 | 29,368 |
Reinsurance recoverable on unpaid losses and loss adjustment expenses | 153,895 | 127,947 |
Ceded unearned premiums | 204,084 | 58,315 |
Prepaid expenses and other assets | 44,088 | 37,072 |
Deferred tax assets, net | 10,622 | |
Property and equipment, net | 603 | 527 |
Intangible assets, net | 8,261 | 9,501 |
Total assets | 1,306,450 | 925,734 |
Liabilities: | ||
Accounts payable and other accrued liabilities | 25,760 | 21,284 |
Reserve for losses and loss adjustment expenses | 231,415 | 173,366 |
Unearned premiums | 471,314 | 284,665 |
Ceded premium payable | 146,127 | 37,460 |
Funds held under reinsurance treaty | 10,680 | 10,882 |
Deferred tax liabilities, net | 3,908 | |
Borrowings from credit agreements | 36,400 | |
Total liabilities | 921,696 | 531,565 |
Stockholders' equity: | ||
Preferred stock, $0.0001 par value, 5,000,000 shares authorized as of December 31, 2022 and December 31, 2021, 0 shares issued and outstanding as of December 31, 2022 and December 31, 2021 | ||
Common stock, $0.0001 par value, 500,000,000 shares authorized, 25,027,467 and 25,428,929 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively | 3 | 3 |
Additional paid-in capital | 333,558 | 318,902 |
Accumulated other comprehensive income (loss) | (36,515) | 5,312 |
Retained earnings | 87,708 | 69,952 |
Total stockholders' equity | 384,754 | 394,169 |
Total liabilities and stockholders' equity | $ 1,306,450 | $ 925,734 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Fixed maturity securities available for sale, amortized cost | ||
Fixed maturity securities available for sale, amortized cost | $ 561,580 | $ 426,122 |
Equity securities, cost | ||
Equity securities, cost | $ 42,352 | $ 31,834 |
Preferred stock | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock | ||
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 25,027,467 | 25,428,929 |
Common stock, shares outstanding (in shares) | 25,027,467 | 25,428,929 |
Consolidated Statements of Inco
Consolidated Statements of Income and Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Revenues: | |||
Gross written premiums | $ 881,868 | $ 535,175 | $ 354,360 |
Ceded written premiums | (524,575) | (223,443) | (155,102) |
Net written premiums | 357,293 | 311,732 | 199,258 |
Change in unearned premiums | (40,827) | (77,906) | (44,190) |
Net earned premiums | 316,466 | 233,826 | 155,068 |
Net investment income | 13,877 | 9,080 | 8,612 |
Net realized and unrealized (losses) gains on investments | (7,529) | 1,277 | 1,488 |
Commission and other income | 4,272 | 3,608 | 3,295 |
Total revenues | 327,086 | 247,791 | 168,463 |
Expenses: | |||
Losses and loss adjustment expenses | 78,672 | 41,457 | 64,115 |
Acquisition expenses | 110,771 | 95,433 | 64,041 |
Other underwriting expenses | 69,219 | 53,723 | 34,084 |
Interest expense | 873 | 40 | |
Total expenses | 259,535 | 190,653 | 162,240 |
Income before income taxes | 67,551 | 57,138 | 6,223 |
Income tax expense (benefit) | 15,381 | 11,291 | (34) |
Net income | 52,170 | 45,847 | 6,257 |
Other comprehensive income, net: | |||
Net unrealized (losses) gains on securities available for sale | (41,827) | (7,934) | 8,560 |
Total comprehensive income | $ 10,343 | $ 37,913 | $ 14,817 |
Per Share Data: | |||
Basic earnings per share | $ 2.07 | $ 1.80 | $ 0.25 |
Diluted earnings per share | $ 2.02 | $ 1.76 | $ 0.24 |
Weighted-average common shares outstanding: | |||
Basic (in shares) | 25,243,397 | 25,459,514 | 24,872,251 |
Diluted (in shares) | 25,796,008 | 26,111,904 | 25,598,647 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholder's Equity - USD ($) $ in Thousands | Common Stock Stock Issued in January | Common Stock Stock Issued in June | Common Stock | Additional Paid-In Capital Stock Issued in January | Additional Paid-In Capital Stock Issued in June | Additional Paid-In Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings Cumulative 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, 2019 | $ 2 | $ 180,012 | $ 4,686 | $ (156) | $ 33,856 | $ (156) | $ 218,556 | ||||||
Beginning balance (in shares) at Dec. 31, 2019 | 23,468,750 | ||||||||||||
Changes in Stockholders' Equity | |||||||||||||
Other comprehensive income (loss), net of tax | 8,560 | 8,560 | |||||||||||
Stock-based compensation | 2,167 | 2,167 | |||||||||||
Issuance of common stock in stock offerings, net of offering costs | $ 1 | $ 35,464 | $ 90,082 | $ 35,464 | $ 90,083 | ||||||||
Issuance of common stock in stock offerings, net of offering costs (in shares) | 750,000 | 1,150,000 | |||||||||||
Issuance of common stock via employee stock purchase plan | 741 | 741 | |||||||||||
Issuance of common stock via employee stock purchase plan (in shares) | 28,367 | ||||||||||||
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 | ||||||||||||
Changes in Stockholders' Equity | |||||||||||||
Other comprehensive income (loss), net of tax | (7,934) | (7,934) | |||||||||||
Stock-based compensation | 5,584 | 5,584 | |||||||||||
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 | 2,092 | $ 2,092 | |||||||||||
Issuance of common stock via equity incentive plan (in shares) | 132,436 | ||||||||||||
Repurchases of common stock | (15,852) | (15,852) | |||||||||||
Repurchases of common stock (in shares) | (239,096) | ||||||||||||
Net income | 45,847 | 45,847 | |||||||||||
Ending balance at Dec. 31, 2021 | $ 3 | 318,902 | 5,312 | 69,952 | $ 394,169 | ||||||||
Ending balance (in shares) at Dec. 31, 2021 | 25,428,929 | 25,428,929 | |||||||||||
Changes in Stockholders' Equity | |||||||||||||
Other comprehensive income (loss), net of tax | (41,827) | $ (41,827) | |||||||||||
Stock-based compensation | 11,624 | 11,624 | |||||||||||
Issuance of common stock via employee stock purchase plan | 760 | $ 760 | |||||||||||
Issuance of common stock via employee stock purchase plan (in shares) | 13,990 | 13,990 | |||||||||||
Issuance of common stock via equity incentive plan | 2,272 | $ 2,272 | |||||||||||
Issuance of common stock via equity incentive plan (in shares) | 205,963 | ||||||||||||
Repurchases of common stock | (34,414) | (34,414) | |||||||||||
Repurchases of common stock (in shares) | (621,415) | ||||||||||||
Net income | 52,170 | 52,170 | |||||||||||
Ending balance at Dec. 31, 2022 | $ 3 | $ 333,558 | $ (36,515) | $ 87,708 | $ 384,754 | ||||||||
Ending balance (in shares) at Dec. 31, 2022 | 25,027,467 | 25,027,467 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Operating activities | |||
Net income | $ 52,170 | $ 45,847 | $ 6,257 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Stock-based compensation expense | 11,624 | 5,584 | 2,167 |
Depreciation and amortization expense | 4,115 | 3,544 | 1,336 |
Allowance for credit loss on fixed maturity securities | 236 | 106 | |
Net realized and unrealized losses (gains) on investments | 7,529 | (1,277) | (1,488) |
Amortization of premium on fixed maturity securities | 1,607 | 2,317 | 1,214 |
Deferred income tax expense | (3,519) | 641 | 1,094 |
Changes in operating assets and liabilities: | |||
Accrued investment income | (1,052) | (180) | (1,159) |
Premium receivable | (74,846) | (39,170) | (12,754) |
Deferred policy acquisition costs | (787) | (20,472) | (10,280) |
Reinsurance recoverables | (36,298) | (52,587) | (87,473) |
Ceded unearned premiums | (145,768) | (23,284) | (8,926) |
Prepaid expenses and other assets | (4,017) | 591 | (16,414) |
Accounts payable and other accrued liabilities | 5,426 | (946) | 5,998 |
Reserve for losses and loss adjustment expenses | 58,049 | 44,330 | 112,215 |
Unearned premiums | 186,649 | 101,176 | 53,116 |
Ceded premiums payable | 108,667 | 15,227 | 10,850 |
Funds held under reinsurance treaty | (202) | 6,367 | 2,857 |
Income taxes payable | (1,117) | ||
Net cash provided by operating activities | 169,583 | 87,814 | 57,493 |
Investing activities | |||
Purchases of property and equipment | (313) | (18) | (132) |
Capitalized software costs | (5,623) | (4,836) | (3,942) |
Purchases of fixed maturity securities | (382,114) | (166,894) | (295,002) |
Purchases of equity securities | (10,518) | (49,680) | (46,944) |
Sales and maturities of fixed maturity securities | 242,726 | 120,198 | 124,243 |
Sales of equity securities | 41,553 | 45,983 | |
Securities receivable or payable, net | (950) | 1,500 | (2,523) |
Purchase of policy renewal rights | (15) | (11) | (7,068) |
Net cash used in investing activities | (156,807) | (58,188) | (185,385) |
Financing activities | |||
Proceeds from line of credit | 36,400 | ||
Proceeds from common stock issued via employee stock purchase plan | 760 | 719 | 741 |
Proceeds from common stock issued via stock option exercises | 2,272 | 2,092 | 2,041 |
Repurchase of common stock | (34,415) | (15,852) | |
Net cash provided by (used in) financing activities | 5,017 | (13,041) | 128,329 |
Net increase in cash, cash equivalents and restricted cash | 17,793 | 16,585 | 437 |
Cash, cash equivalents and restricted cash at beginning of period | 50,371 | 33,786 | 33,349 |
Cash, cash equivalents and restricted cash at end of period | 68,164 | 50,371 | 33,786 |
Supplementary cash flow information: | |||
Cash paid for income taxes | 18,890 | $ 2,104 | 7,182 |
Cash paid for interest | $ 704 | ||
Stock Issued in January | |||
Financing activities | |||
Proceeds from stock offerings, net of offering costs | 35,464 | ||
Stock Issued in June | |||
Financing activities | |||
Proceeds from stock offerings, net of offering costs | $ 90,083 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Cash and cash equivalents and restricted cash and cash equivalents | ||||
Cash and cash equivalents | $ 68,108 | $ 50,284 | ||
Restricted cash | 56 | 87 | ||
Cash and cash equivalents and restricted cash | $ 68,164 | $ 50,371 | $ 33,786 | $ 33,349 |
Summary of Operations and Basis
Summary of Operations and Basis of Presentation | 12 Months Ended |
Dec. 31, 2022 | |
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 Fronting Products, Inland Marine, Hawaii residential hurricane, Specialty Homeowners, Casualty, and Flood products. PSIC is licensed to underwrite insurance on an admitted basis in 37 states in the United States, as of December 31, 2022, 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. 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, 2022 | |
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. The Company’s allowance for credit losses related to its available-for-sale securities was immaterial as of December 31, 2022 and December 31, 2021. 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. The Company recorded an allowance for uncollectable premiums of $0.1 million and $0.3 million as of December 31, 2022 and December 31, 2021, respectively, and believes that all other amounts are collectable. Earned Premiums 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, 2022 or 2021. 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 or fronting fees and are shown as acquisition expenses in the accompanying consolidated statements of income and comprehensive 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 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 2028. 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 which the Company is amortizing over a period of 8 years. 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. No impairments of intangible assets were recognized for the years ended December 31, 2022, 2021 or 2020. 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, 2022, 2021 or 2020. 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. The Company also writes premiums under fronting agreements where it cedes the majority of premium and risk to reinsurers in exchange for a fronting fee. Reinsurance premiums, commissions, and 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 and fronting fees in connection with quota share and fronting reinsurance contracts. The ceding commissions and fronting fees 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, 2022 or December 31, 2021. 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. The fair value of performance stock units containing employee service or company financial performance based conditions is determined using the closing price of the Company's common stock on the grant date. The fair value of performance stock units containing conditions based on performance of the Company’s stock is determined using a Monte Carlo simulation. 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, 2022 and 2021, 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, 2022, 2021, or 2020. 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 The Company has not adopted any new accounting guidance during the year ended December 31, 2022. Recently issued accounting pronouncements not yet adopted To date, there have been no recent accounting pronouncements not yet effective that have significance, or potential significance, to the Company’s consolidated financial statements. |
Investments
Investments | 12 Months Ended |
Dec. 31, 2022 | |
Investments | |
Investments | 3. Investments The Company’s available-for-sale investments are summarized as follows: Gross Gross Amortized Unrealized Unrealized Fair December 31, 2022 Cost or Cost Gains Losses Value (in thousands) Fixed maturities: U.S. Governments $ 50,802 $ 2 $ (2,253) $ 48,551 States, territories, and possessions 5,857 49 (552) 5,354 Political subdivisions 4,919 — (621) 4,298 Special revenue excluding mortgage/asset-backed securities 37,260 26 (4,487) 32,799 Industrial and miscellaneous 278,164 79 (24,148) 254,095 Mortgage/asset-backed securities 184,578 251 (14,862) 169,967 Total available-for-sale investments $ 561,580 $ 407 $ (46,923) $ 515,064 Gross Gross Amortized Unrealized Unrealized Fair December 31, 2021 Cost or Cost Gains Losses Value (in thousands) Fixed maturities: U.S. Governments $ 16,713 $ 347 $ (190) $ 16,870 States, territories, and possessions 3,789 288 (63) 4,014 Political subdivisions 6,295 107 (22) 6,380 Special revenue excluding mortgage/asset-backed securities 43,301 1,273 (76) 44,498 Industrial and miscellaneous 245,064 5,873 (1,891) 249,046 Mortgage/asset-backed securities 110,960 1,377 (463) 111,874 Total available-for-sale investments $ 426,122 $ 9,265 $ (2,705) $ 432,682 Security holdings in an unrealized loss position As of December 31, 2022, the Company held 543 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, 2022 and 2021, are as follows: Less Than 12 Months More Than 12 Months Total Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2022 Value Losses Value Losses Value Losses (in thousands) Fixed maturity securities: U.S. Governments $ 41,077 $ (1,523) $ 6,853 $ (730) $ 47,930 $ (2,253) States, territories, and possessions 3,227 (552) — — 3,227 (552) Political subdivisions 4,298 (621) — — 4,298 (621) Special revenue excluding mortgage/asset-backed securities 25,091 (3,287) 5,080 (1,200) 30,171 (4,487) Industrial and miscellaneous 192,185 (15,667) 55,605 (8,481) 247,790 (24,148) Mortgage/asset-backed securities 118,815 (9,908) 32,448 (4,954) 151,263 (14,862) Total $ 384,693 $ (31,558) $ 99,986 $ (15,365) $ 484,679 $ (46,923) Less Than 12 Months More Than 12 Months Total Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2021 Value Losses Value Losses Value Losses (in thousands) Fixed maturity securities: U.S. Governments $ 5,968 $ (147) $ 1,457 $ (43) $ 7,425 $ (190) States, territories, and possessions 1,444 (63) — — 1,444 (63) Political subdivisions 1,815 (22) — — 1,815 (22) Special revenue excluding mortgage/asset-backed securities 6,280 (76) — — 6,280 (76) Industrial and miscellaneous 94,020 (1,468) 5,570 (423) 99,590 (1,891) Mortgage/asset-backed securities 51,246 (412) 2,319 (51) 53,565 (463) Total $ 160,773 $ (2,188) $ 9,346 $ (517) $ 170,119 $ (2,705) The Company reviewed the above securities at each balance sheet date to consider whether it was necessary to recognize a credit loss related to any of these securities. An immaterial allowance for credit losses was recorded pertaining to one investment security as of December 31, 2022 and 2021. For the remaining securities, the Company determined that the fixed maturity securities’ unrealized losses were primarily the result of the interest rate environment and not the credit quality of the issuers. The Company does not intend to sell the investments and it is not more likely than not that the Company will be required to sell the investments before the recovery of their amortized cost basis. Contractual maturities of available-for-sale fixed maturity securities The amortized cost and fair value of fixed maturity securities at December 31, 2022, by contractual maturity, are shown below. Amortized Fair Cost Value (in thousands) Due within one year $ 41,686 $ 41,106 Due after one year through five years 182,785 170,399 Due after five years through ten years 126,990 112,822 Due after ten years 25,541 20,770 Mortgage and asset-backed securities 184,578 169,967 $ 561,580 $ 515,064 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, 2022 2021 2020 (in thousands) Change in net unrealized gains (losses) Fixed maturities $ (53,076) $ (10,148) $ 10,835 Net increase (decrease) $ (53,076) $ (10,148) $ 10,835 Net investment income summary Net investment income is summarized as follows: Year Ended December 31, 2022 2021 2020 (in thousands) Interest income $ 13,631 $ 9,119 $ 8,554 Dividend income 739 461 489 Investment management fees and expenses (493) (500) (431) Net investment income $ 13,877 $ 9,080 $ 8,612 Net realized and unrealized investment gains and losses The following table presents net realized and unrealized investment gains and losses: Year Ended December 31, 2022 2021 2020 (in thousands) Realized gains: Gains on sales of fixed maturity securities $ 14 $ 466 $ 501 Gains on sales of equity securities — 1,416 62 Total realized gains 14 1,882 563 Realized losses: Losses on sales of fixed maturity securities (2,340) (1) (46) Losses on sales of equity securities — — (68) Total realized losses (2,340) (1) (114) Net realized investment gains (losses) (2,326) 1,881 449 Net unrealized gains (losses) on equity securities (5,203) (604) 1,039 Net realized and unrealized gains (losses) on investments $ (7,529) $ 1,277 $ 1,488 Proceeds from the sale of fixed maturity securities were $19.7 million, $17.4 million and $39.8 million for the years ended December 31, 2022, 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 consolidated balance sheets. At December 31, 2022 and 2021, the carrying value of securities on deposit with state regulatory authorities was $8.5 million and $7.5 million, respectively. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 and 2021: December 31, 2022 Level 1 Level 2 Level 3 Total (in thousands) Assets: Fixed maturity securities U.S. Governments $ — $ 48,551 $ — $ 48,551 States, territories, and possessions — 5,354 — 5,354 Political subdivisions — 4,298 — 4,298 Special revenue excluding mortgage/asset-backed securities — 32,799 — 32,799 Industrial and miscellaneous — 254,095 — 254,095 Mortgage/asset-backed securities — 169,967 — 169,967 Equity securities 38,576 — — 38,576 Cash, cash equivalents, and restricted cash 68,164 — — 68,164 Total assets $ 106,740 $ 515,064 $ — $ 621,804 December 31, 2021 Level 1 Level 2 Level 3 Total (in thousands) Assets: Fixed maturity securities U.S. Governments $ — $ 16,870 $ — $ 16,870 States, territories, and possessions — 4,014 — 4,014 Political subdivisions — 6,380 — 6,380 Special revenue excluding mortgage/asset-backed securities — 44,498 — 44,498 Industrial and miscellaneous — 249,046 — 249,046 Mortgage/asset-backed securities — 110,374 1,500 111,874 Equity securities 33,261 — — 33,261 Cash, cash equivalents, and restricted cash 50,371 — — 50,371 Total assets $ 83,632 $ 431,182 $ 1,500 $ 516,314 The carrying amounts of financial assets and liabilities reported in the accompanying condensed consolidated balance sheet including cash and cash equivalents, restricted cash, receivables, reinsurance recoverable, and accounts payable and other accrued liabilities approximate fair value due to their short term-maturity. The carrying amount of the Company’s borrowings under the Federal Home Loan Bank (“FHLB”) line of credit approximates fair value as the Company is currently borrowing at the overnight rate, which is adjusted daily. Transfers between Level 3 and Level 2 securities result from changes in the availability of observable market inputs and are recorded at the beginning of the reporting period. As of December 31, 2022, the Company had no fixed income securities classified as Level 3. As of December 31, 2021, the Company had $1.5 million of fixed income securities classified as Level 3 due to the lack of availability of observable market inputs for recently purchased securities. |
Policy Acquisition Costs
Policy Acquisition Costs | 12 Months Ended |
Dec. 31, 2022 | |
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: Year ended December 31, 2022 2021 2020 (in thousands) Deferred Policy Acquisition Costs: Balance, beginning of year $ 55,953 $ 35,481 $ 25,201 Additions to deferred balance: Direct commissions 209,061 133,242 82,786 Ceding commissions and fronting fees (109,302) (32,249) (19,371) Premium taxes 10,166 8,209 7,024 Total net additions 109,925 109,202 70,439 Amortization of net policy acquisition costs (109,138) (88,730) (60,159) Balance, end of year $ 56,740 $ 55,953 $ 35,481 Acquisition expenses: Amortization of net policy acquisition costs $ 109,138 $ 88,730 $ 60,159 Period costs 1,633 6,703 3,882 Total Acquisition expenses $ 110,771 $ 95,433 $ 64,041 |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2022 | |
Intangible Assets | |
Intangible Assets | 6. Intangible Assets December 31, 2022 2021 (in thousands) Indefinite-lived intangibles: State insurance licenses $ 744 $ 744 Finite-lived intangibles: Customer relationships 10,023 10,008 Accumulated amortization on finite-lived intangibles (2,506) (1,251) Total intangible assets $ 8,261 $ 9,501 State insurance licenses consist of licenses acquired at the inception of PSIC. Customer relationships represents the fair value of acquired policy renewal rights. The Company began amortizing this intangible asset on a straight line basis in 2021 and is amortizing it over a period of 8 years . Amortization expense for the years ended December 31, 2022 and 2021 was |
Capitalized Assets
Capitalized Assets | 12 Months Ended |
Dec. 31, 2022 | |
Capitalized Assets | |
Capitalized Assets | 7. Capitalized Assets Capitalized software is included as a component of prepaid expenses and other assets in the Company’s consolidated balance sheet. The balances are as follows: Accumulated Net December 31, 2022 Cost Amortization Book Value (in thousands) Capitalized Software $ 18,622 $ (6,303) $ 12,319 Accumulated Net December 31, 2021 Cost Amortization Book Value (in thousands) Capitalized Software $ 13,205 $ (3,831) $ 9,374 Amortization expense relating to capitalized software for the years ended December 31, 2022, 2021 and 2020 was $2.6 million, $2.1 million, and $1.1 million, respectively. Property and Equipment consists of the following: Accumulated Net December 31, 2022 Cost Depreciation Book Value (in thousands) Leasehold improvements $ 879 $ (694) $ 185 Computer hardware 402 (205) 197 Office equipment and furniture 724 (503) 221 Total $ 2,005 $ (1,402) $ 603 Accumulated Net December 31, 2021 Cost Depreciation Book Value (in thousands) Leasehold improvements $ 879 $ (576) $ 303 Computer hardware 294 (148) 146 Office equipment and furniture 519 (441) 78 Total $ 1,692 $ (1,165) $ 527 Depreciation expense for the years ended December 31, 2022, 2021 and 2020 was $0.2 million, $0.2 million, and $0.2 million respectively. |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
Leases | 8. Leases The Company has operating leases for office space used to conduct its insurance operations and administration activities. Operating lease right-of-use (“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, 2022, 2021 and 2020 were $0.8 million, $0.7 million and $0.7 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, 2022 (in thousands) Operating cash outflows from operating leases $ 922 December 31, 2022 ($ in thousands) Operating lease ROU assets $ 1,688 Operating lease liabilities $ 2,066 Weighted-average remaining lease term on operating leases 2.7 years Weighted-average discount rate on operating leases 1.4 % Future minimum lease payments as of December 31, 2022 are as follows: Years ending December 31, (in thousands) 2023 966 2024 640 2025 168 2026 173 2027 240 2028 — Total future minimum lease payments $ 2,187 Less: imputed interest (121) Total operating lease liability $ 2,066 |
Reserve for Losses and Loss Adj
Reserve for Losses and Loss Adjustment Expenses | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022, 2021, and 2020. 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, 2022 2021 2020 (in thousands) Reserve for losses and loss adjustment expenses net of reinsurance recoverables at beginning of period $ 45,419 $ 34,470 $ 3,869 Add: Incurred losses and loss adjustment expenses, net of reinsurance, related to: Current year 76,289 45,042 64,179 Prior years 2,383 (3,585) (64) Total incurred 78,672 41,457 64,115 Deduct: Loss and loss adjustment expense payments, net of reinsurance, related to: Current year 21,802 12,063 31,879 Prior years 24,769 18,445 1,635 Total payments 46,571 30,508 33,514 Reserve for losses and loss adjustment expense net of reinsurance recoverables at end of period 77,520 45,419 34,470 Add: Reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period 153,895 127,947 94,566 Reserve for losses and loss adjustment expenses gross of reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period $ 231,415 $ 173,366 $ 129,036 The foregoing reconciliation shows a loss and loss adjustment expense deficiency of $2.4 million developed in 2022 and loss and loss adjustment expense reserve redundancies of $3.6 million and $0.1 million developed in 2021 and 2020, respectively. During 2022, the net unfavorable reserve development was primarily attributable to prior year catastrophe events including certain 2020 Hurricanes, offset by favorable development related to 2021 attritional and catastrophe losses. During 2021, this net favorable reserve development was primarily due to the effect of ceding gross unfavorable development under our reinsurance program and lower than anticipated severity of catastrophe losses associated with certain hurricanes that occurred during the second half of 2020. 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. 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, 2022 and for previous accident years. The information provided herein about incurred and paid accident year claims development for the years ended December 31, 2022 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, 2022 Incurred but Cumulative Year Ended December 31, Not Reported Number of Accident Year 2015(1) 2016(1) 2017(1) 2018(1) 2019(1) 2020(1) 2021(1) 2022 Liabilities Claims 2015 $ 2,048 $ 1,785 $ 1,658 $ 1,636 $ 1,642 $ 1,636 $ 1,643 $ 1,612 $ — 567 2016 6,069 5,878 5,721 5,636 5,622 5,609 5,604 — 1,357 2017 9,354 7,418 6,630 6,388 5,587 5,681 11 3,516 2018 2,193 2,008 1,930 1,929 1,529 — 1,017 2019 914 838 807 676 36 1,386 2020 19,100 15,088 13,715 106 4,451 2021 8,453 5,765 — 4,081 2022 7,237 1,000 2,149 Total $ 41,819 $ 1,153 18,524 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(1) 2020(1) 2021(1) 2022 2015 $ 860 $ 1,379 $ 1,523 $ 1,615 $ 1,634 $ 1,636 $ 1,643 $ 1,612 2016 4,120 5,356 5,585 5,607 5,619 5,609 5,604 2017 7,135 7,375 6,628 6,371 5,586 5,649 2018 1,550 1,853 1,922 1,922 1,529 2019 546 685 685 704 2020 13,588 13,095 13,161 2021 4,351 5,472 2022 5,310 Total $ 39,041 Reserve for losses and loss adjustment expense, net of reinsurance $ 2,778 (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 (2) Year 6 Year 7 Year 8 (2) Payout percentage 85.32 % 16.39 % 0.81 % 0.88 % (9.53) % 0.35 % 0.17 % (1.92) (2) Negative payout percentages are due to timing of reinsurance payments, allocations of reinsurance between different lines of business based on actual results, and allocation of reinsurance to different periods for reinsurance treaties in effect for multiple periods. These are primarily associated with larger recoveries from catastrophe events in earlier years of operation. Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance Special Property Insurance (in thousands) As of December 31, 2022 Incurred but Cumulative Year Ended December 31, Not Reported Number of Accident Year 2015(1) 2016(1) 2017(1) 2018(1) 2019(1) 2020(1) 2021(1) 2022 Liabilities Claims 2015 $ 630 $ 719 $ 671 $ 671 $ 678 $ 677 $ 673 $ 692 $ — 6 2016 1,381 1,249 1,251 1,454 1,453 1,453 1,521 — 26 2017 3,071 3,475 4,014 4,264 4,974 4,987 — 110 2018 5,970 6,095 6,009 6,021 6,412 — 176 2019 3,661 3,385 3,140 3,617 62 294 2020 42,334 42,160 45,850 2,263 960 2021 21,383 19,393 758 1386 2022 35,650 10,515 1,425 Total $ 118,122 $ 13,598 4,383 Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance Special Property Insurance (in thousands) Accident Year 2015(1) 2016(1) 2017(1) 2018(1) 2019(1) 2020(1) 2021(1) 2022 2015 $ 265 $ 438 $ 586 $ 626 $ 666 $ 673 $ 673 $ 692 2016 703 1,064 1,216 1,444 1,453 1,453 1,521 2017 1,967 3,344 4,011 4,269 4,974 4,987 2018 2,859 6,036 6,009 6,021 6,414 2019 1,633 2,825 3,072 3,466 2020 18,274 36,127 42,343 2021 7,004 17,028 2022 7,337 Total 83,788 Reserve for losses and loss adjustment expense, net of reinsurance 34,334 (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 Year 7 Year 8 Payout percentage 38.78 % 35.64 % 10.79 % 7.40 % 6.66 % 0.42 % 2.24 % 2.70 % 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: 2022 (in thousands) Net outstanding liabilities: Homeowners’ insurance $ 2,778 Special property 34,334 Reinsurance- Nonproportional assumed property(1) 8,568 Other 31,840 Reserve for losses and loss adjustment expense, net of reinsurance 77,520 Reinsurance recoverable on unpaid claims: Homeowners’ insurance $ 11,339 Special property 97,231 Other 45,325 Total reinsurance recoverable on unpaid claims 153,895 Total reserve for losses and loss adjustment expenses $ 231,415 (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, 2022 | |
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 primarily utilizes excess of loss (XOL) and quota share reinsurance to protect against catastrophe and attritional losses. The Company also writes premiums under fronting agreements, whereby the majority of premium and risk is ceded to reinsurers and the Company receives a fronting fee. 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, 2022, the Company’s catastrophe event retention is $12.5 million for all perils. As of December 31, 2022, the Company’s XOL reinsurance structure provides protection up to $2.11 billion for earthquake events, $1.01 billion for Hawaii hurricane events, and $250 million for continental U.S. hurricane events. In a quota share agreement, the Company transfers, or cedes, a portion of its premiums to reinsurers and, in return, the reinsurer must share an agreed upon portion of losses and pay a ceding commission to the Company. In a fronting agreement, the Company writes premium and then cedes the majority of the premium and risk in exchange for a fronting fee, which is the primary source of profit in the arrangement. The following table shows ceded written premiums under fronting and quota share arrangements by line of business for the years ended December 31, 2022, 2021 and 2020: The following table shows ceded written premiums under fronting and quota share arrangements by line of business for the years ended December 31, 2022, 2021 and 2020: Year Ended December 31, 2022 2021 2020 (in thousands) Fronting $ 237,285 $ 11,001 $ — Inland Marine 63,627 28,389 5,339 Specialty Homeowners 4,946 27,394 22,295 Commercial Earthquake 20,467 14,447 6,929 Commercial All Risk 6,260 3,948 19,218 Others 32,609 10,822 5,495 Total $ 365,193 $ 96,001 $ 59,276 The Company recognizes ceded unearned premiums related to quota share agreements as an asset on its consolidated balance sheets. As of December 31, 2022 and 2021, ceded unearned premiums totaled $204.1 million and $58.3 million, respectively. The increase was driven primarily by premium growth in lines subject to fronting agreements or quota shares. 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. 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”). During the second quarter of 2022, the Company also closed a $275 million 144A catastrophe bond which became effective June 1, 2022. This catastrophe bond was completed through Torrey Pines Re Ltd., a Bermuda-domiciled special purpose insurer that provides indemnity-based reinsurance covering earthquake events through June 1, 2025. Written premiums ceded under these catastrophe bond agreements were $28.3 million, $11.7 million and $5.0 million for the years ended December 31, 2022, 2021 and 2020, respectively. The effect of reinsurance on premiums written and earned and on losses and LAE incurred for the years ended December 31, 2022, 2021 and 2020, is as follows: 2022 2021 2020 Written Earned Written Earned Written Earned (in thousands) Premiums Written and Earned: Direct $ 816,387 $ 628,973 $ 467,424 $ 384,463 $ 324,253 $ 271,887 Assumed 65,481 66,299 67,751 49,535 30,107 29,569 Ceded (524,575) (378,806) (223,443) (200,172) (155,102) (146,388) Net $ 357,293 $ 316,466 $ 311,732 $ 233,826 $ 199,258 $ 155,068 2022 Losses LAE Total (in thousands) Losses and LAE Incurred: Direct $ 133,517 $ 38,004 $ 171,521 Assumed 23,574 5,998 29,572 Ceded (91,261) (31,159) (122,421) Net $ 65,829 $ 12,843 $ 78,672 2021 Losses LAE Total (in thousands) Losses and LAE Incurred: Direct $ 168,292 $ 13,295 $ 181,587 Assumed 17,184 1,926 19,110 Ceded (148,106) (11,134) (159,240) Net $ 37,370 $ 4,087 $ 41,457 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 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, 2022 and 2021, the Company had retained $10.7 million and $10.9 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, 2022, reinsurance premiums ceded to the Company’s three largest reinsurers totaled $24.7 million, $22.9 million and $18.4 million, representing 23.9% of the total balance. For the year ended December 31, 2021, reinsurance premiums ceded to the Company’s three largest reinsurers totaled $24.7 million, $11.7 million and $10.4 million, representing 20.9% of the total balance. 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. At December 31, 2022 reinsurance recoverable on unpaid losses by the Company’s three largest reinsurers were $60.6 million, |
Credit Agreements
Credit Agreements | 12 Months Ended |
Dec. 31, 2022 | |
Credit Agreements | |
Credit Agreements | 11. Credit Agreements U.S. Bank Credit Agreement In December 2021, the Company entered into a Credit Agreement (the “Credit Agreement”) with certain lenders which provides a revolving credit facility of up to $100.0 million (the “Revolving Loan”). The maturity of the facility is December 8, 2026. The Revolving Loan may be either a SOFR rate loan or a base rate loan, at the Company’s discretion. The Revolving Loan may be prepaid in full or in part at any time with no prepayment premium and may be reduced in full or in part at any time upon prior notice. Interest on the Revolving Loan accrues on each SOFR rate loan at the applicable SOFR (as defined in the Credit Agreement) plus 1.75% and on each base rate loan at the applicable Alternate Base Rate (as defined in the Credit Agreement) plus (ii) 0.75% . In addition, the Company paid a commitment fee of $0.3 million upon closing of the Credit Agreement and must pay an unused line fee of 0.25% per annum on any unborrowed amount under the Credit Agreement. The Company’s obligations under the Credit Agreement are unsecured with a negative pledge against all assets of Palomar and its subsidiaries as described in the Credit Agreement. The Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants, including, among other things, financial covenants, restrictions on indebtedness, liens, investments, mergers, dispositions, prepayment of other indebtedness and dividends and other distributions. The financial covenants in the Credit agreement require the Company not to exceed a maximum leverage ratio and maintain a minimum net worth at the end of each quarter. The Company’s insurance subsidiaries are also required to maintain a minimum Risk Based Capital Ratio at the end of each year and must always maintain a minimum AM Best Financial Strength rating. As of December 31, 2022, the Company was in compliance with all covenants. The Credit Agreement provides for events of default customary for revolving loans of this type, including but not limited to non-payment, breaches, or defaults in the performance of covenants, insolvency, bankruptcy and the occurrence of a material adverse effect on Palomar. During the existence of an event of default, all outstanding amounts of the Revolving Loan shall bear interest at a rate per annum equal to the rate otherwise applicable thereto plus 2.00%. As of December 31, 2022 and 2021, there were no outstanding borrowings under this Credit Agreement. For the year ended December 31, 2022, the Company incurred $0.4 million of interest related to amortization of the commitment fee and unused line fee paid on the Credit Agreement. FHLB Line of Credit The Company’s PSIC subsidiary is a member of the Federal Home Loan Bank of San Francisco (“FHLB”). Membership in the FHLB provides PSIC access to collateralized advances, which can be drawn for general corporate purposes and used to enhance liquidity management. All borrowings are fully secured by a pledge of specific investment securities of PSIC and the borrowing capacity is currently equal to As of December 31, 2022, the Company had $36.4 million of borrowings outstanding through the FHLB at the overnight rate of 4.65%. Interest expense on the FHLB Line of Credit was $0.5 million for the year ended December 31, 2022. There were no borrowings outstanding at December 31, 2021. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity | |
Stockholders' Equity | 12. Stockholders’ Equity As of December 31, 2022 and December 31, 2021, 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, 2022 and December 31, 2021, the Company has 500,000,000 common shares authorized and 25,027,467 and 25,428,929 common shares issued and outstanding, respectively, with a par value of $0.0001. Additional paid in capital is $333.6 million as of December 31, 2022 and $318.9 million as of December 31, 2021. Common stock reserved for future issuance consists of the following as of December 31, 2022: Stock options outstanding under 2019 Equity Incentive Plan 882,892 Restricted stock units outstanding under 2019 Equity Incentive Plan 271,951 Performance stock units outstanding under 2019 Equity Incentive Plan 383,103 Shares authorized for future issuance under 2019 Equity Incentive Plan 2,594,587 Shares authorized for future issuance under 2019 Employee Stock Purchase Plan 907,850 Total 5,040,383 The below table summarizes the Company’s stock-based compensation expense for each period presented: Year ended December 31, 2022 2021 2020 (in thousands) Stock-Based Compensation Expense $ 11,624 $ 5,584 $ 2,167 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. 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 period between two first grant vesting period The following table summarizes stock option transactions for the year ended December 31, 2022: Weighted average remaining Aggregate Number of Weighted-average contractual term intrinsic value shares exercise price (in years) (in thousands) Outstanding at January 1, 2022 933,051 $ 29.41 7.59 $ 36,679 Options granted 122,539 51.99 Options exercised (148,427) 15.31 Options canceled (24,271) 68.13 Outstanding at December 31, 2022 882,892 $ 33.85 6.92 $ 16,990 Vested and Exercisable at December 31, 2022 658,858 $ 26.33 6.48 $ 16,001 The total intrinsic value of stock options exercised during the years ended December 31, 2022 and December 31, 2021 was $7.1 million and $8.5 million, respectively. No options were exercised prior to 2020. As of December 31, 2022, the Company had approximately $3.6 million of total unrecognized stock-based compensation expense related to stock options expected to be recognized over a weighted-average period of 1.58 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, 2022 2021 2020 (in thousands) Risk free rate of return (1) 1.69% - 4.23% 0.57% - 1.35% 0.32% - 1.52% Expected share price volatility (2) 39.73% - 43.03% 26.06% - 39.41% 18.13% - 25.67% Expected life in years (3) 5.89 5.89 5.63 - 6.08 Dividend yield (4) 0% 0% 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 does not currently plan to issue dividends. Restricted Stock Units Restricted stock units are valued on their grant date and generally vest first one third vesting anniversary value grant The following table summarizes RSU transactions for the year ended December 31, 2022: Weighted-average Number of grant date shares fair value Non vested outstanding at January 1, 2022 235,696 $ 79.33 Granted 100,106 51.53 Vested (57,536) 80.60 Forfeited (6,315) 76.30 Non vested outstanding at December 31, 2022 271,951 $ 68.90 As of December 31, 2022, the Company had approximately $15.4 million of total unrecognized stock-based compensation expense related to RSUs expected to be recognized over a weighted-average period of 2.87 years. Performance Stock Units (“PSUs”) The Company issues PSUs to employees with a combination of service, performance, and market conditions. The majority of PSUs were issued pursuant to the 2021 Executive Stock Grants, as described below. 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 year ended December 31, 2022: Weighted-average Number of grant date shares fair value Non vested outstanding at January 1, 2022 358,401 $ 36.87 Granted 26,165 50.36 Vested — — Forfeited (1,463) 80.69 Non vested outstanding at December 31, 2022 383,103 $ 37.62 The PSU grants above represent the number of shares that would vest based on achievement of all stock price milestones in the executive stock grants and the 100% achievement of the predetermined company performance conditions for the other PSU grants. The actual number of PSUs which will vest is subject to adjustment based on the Company’s actual stock price performance and financial performance relative to the predetermined targets and subject to recipient service requirements. As of December 31, 2022, the Company had approximately $10.5 million of total unrecognized stock-based compensation expense related to PSUs expected to be recognized over a weighted-average period of 3.54 years. 2021 Executive Stock Grants During the year ended December 31, 2021, the Company granted 192,307 RSUs and 350,000 PSUs to various executives, including the Company’s CEO. The RSUs vest over a period of five years with one fifth vesting upon the first, second and third anniversary of the grants and the remainder vesting monthly thereafter. 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 employee and/or director through the fifth anniversary of the grant date the PSUs to vest. Other executives must remain as employees through December 31, 2026 for the PSUs to vest. As of December 31, 2022, none of the stock price milestones have been achieved. 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 $14.6 million of expense relating to the RSUs and $12.4 million relating to the PSUs. The expense shall be recognized straight-line over the requisite service period of approximately five years . Should these executives leave prior to the requisite service period, any recognized compensation expense related to unvested RSUs and PSUs will be reversed. 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 13,990 and 9,793 shares pursuant to the ESPP during the years ended December 31, 2022 and December 31, 2021, respectively. Share repurchases During the year ended December 31, 2021, the Company’s Board of Directors authorized a $40 million share repurchase program and the Company repurchased $15.9 million of shares under this program in 2021. On January 24, 2022, the Board of Directors approved a new share repurchase program, replacing the existing program and authorizing the repurchase by the Company of up to $100 million of its outstanding shares of common stock over the period ending on March 31, 2024. The Company purchased 621,415 shares for $34.4 million under this program during the year ended December 31, 2022. 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 | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 2021 2020 (in thousands) Balance as of January 1 $ 5,312 $ 13,246 $ 4,686 Other comprehensive income (loss) before reclassification (55,270) (9,579) 11,292 Federal income tax (expense) benefit 11,607 2,012 (2,371) Other comprehensive income (loss) before reclassification, net of tax (43,663) (7,567) 8,921 Amounts reclassified from AOCI 2,325 (464) (456) Federal income tax expense (benefit) (489) 97 95 Amounts reclassified from AOCI, net of tax 1,836 (367) (361) Other comprehensive income (loss) (41,827) (7,934) 8,560 Balance at end of period $ (36,515) $ 5,312 $ 13,246 |
Underwriting Information
Underwriting Information | 12 Months Ended |
Dec. 31, 2022 | |
Underwriting Information | |
Underwriting Information | 14. Underwriting Information The Company has a single Year Ended December 31, 2022 2021 2020 ($ in thousands) % of % of % of Amount GWP Amount GWP Amount GWP Product Fronting $ 223,249 25.3 % $ 11,459 2.2 % $ - NM Residential Earthquake 213,803 24.2 % 171,048 32.0 % 140,934 39.8 % Commercial Earthquake 131,677 14.9 % 90,552 16.9 % 58,890 16.6 % Inland Marine 105,068 11.9 % 57,124 10.7 % 15,423 4.3 % Commercial All Risk 51,671 5.9 % 38,640 7.2 % 53,933 15.2 % Casualty 35,791 4.1 % 9,584 1.9 % — NM Hawaii Hurricane 32,967 3.7 % 30,298 5.6 % 13,824 3.9 % Specialty Homeowners 29,959 3.4 % 67,894 12.7 % 49,849 14.1 % Residential Flood 14,539 1.7 % 11,652 2.2 % 8,176 2.3 % Other 43,144 4.9 % 46,924 8.6 % 13,331 3.8 % Total Gross Written Premiums $ 881,868 100.0 % $ 535,175 100.0 % $ 354,360 100.0 % NM-Not Meaningful Gross written premiums by state are as follows: Year Ended December 31, 2022 2021 2020 ($ in thousands) % of % of % of Amount GWP Amount GWP Amount GWP State California $ 418,809 47.5 % $ 244,416 45.6 % $ 172,765 48.8 % Texas 90,459 10.3 % 62,893 11.8 % 67,974 19.2 % Washington 41,827 4.7 % 23,608 4.4 % 14,328 4.0 % Hawaii 40,157 4.5 % 34,993 6.5 % 16,398 4.6 % Florida 38,715 4.4 % 27,386 5.1 % 5,795 1.7 % Oregon 24,108 2.7 % 13,677 2.6 % 10,038 2.8 % Illinois 17,368 2.0 % 12,133 2.3 % 6,133 1.7 % North Carolina 12,776 1.5 % 15,271 2.9 % 11,143 3.1 % Other 197,649 22.4 % 100,798 18.8 % 49,786 14.1 % Total Gross Written Premiums $ 881,868 100.0 % $ 535,175 100.0 % $ 354,360 100.0 % Gross written premiums by insurance subsidiary are as follows: Year Ended December 31, 2022 2021 2020 ($ in thousands) % of % of % of Amount GWP Amount GWP Amount GWP Subsidiary PSIC $ 489,720 55.5 % $ 383,064 71.6 % $ 324,870 91.7 % PESIC 392,148 44.5 % 152,111 28.4 % 29,490 8.3 % Total Gross Written Premiums $ 881,868 100.0 % $ 535,175 100.0 % $ 354,360 100.0 % The Company distributes a significant portion of its Fronting, Residential Earthquake, Commercial Earthquake, and Hawaii Hurricane products through two program administrators. Each of the 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 products accounted for $417.5 million or 47.3% of the Company’s gross written premiums for the year ended December 31, 2022, $255.8 million or 48.2% of the Company’s gross written premiums for the year ended December 31, 2021, and $191.3 million or 54.0% of the Company’s gross written premiums for the year ended December 31, 2020. |
Retirement and Post-Employment
Retirement and Post-Employment Retirement Plans | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022, 2021 and 2020 the Company’s contributions to the plan were $0.7 million, $0.7 million and $0.3 million, respectively. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Income Taxes | 16. Income Taxes The components of the Company’s income tax expense (benefit) are as follows: December 31, 2022 2021 2020 (in thousands) Current $ 18,842 $ 10,650 $ (1,128) Deferred (3,461) 641 1,094 Income tax expense (benefit) $ 15,381 $ 11,291 $ (34) As of December 31, 2022 and 2021, significant components of the Company’s deferred tax assets and liabilities were as follows: December 31, 2022 2021 (in thousands) Deferred tax assets: Losses and LAE reserve discount $ 680 $ 279 State tax net operating losses 3,070 2,879 Deferred Intercompany 656 — Unearned premiums 11,258 9,569 Capitalized organizational costs 184 214 Unrealized losses on investments 9,891 — Deferred compensation 1,585 997 Other 1,544 1,285 Total deferred tax assets $ 28,868 $ 15,223 Deferred tax liabilities: Deferred acquisition costs $ (11,922) $ (11,754) Unrealized gains on investments — (1,612) Internally developed software (1,520) (1,969) Other (1,734) (919) Total deferred tax liabilities (15,176) (16,254) Net deferred tax asset (liability) before valuation allowance 13,692 (1,031) Valuation allowance (3,070) (2,879) Total net deferred tax assets (liabilities) $ 10,622 $ (3,910) 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 As of December 31, 2022, there are no federal net operating losses or tax credit carryforwards. 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, 2022, 2021 and 2020: Years Ended December 31, 2022 2021 2020 ($ in thousands) Expense computed at federal tax rate $ 14,186 21.00 % $ 11,999 21.00 % $ 1,321 21.00 % Stock-based compensation 153 0.23 % (1,067) (1.87) % (1,538) (24.44) % Dividend received deduction and tax‑exempt interest (101) (0.15) % (81) (0.14) % (67) (1.06) % Valuation allowance 191 0.28 % 2,199 3.85 % 606 9.63 % Other 952 1.41 % (1,759) (3.08) % (356) (5.67) % Income tax expense (benefit) $ 15,381 22.77 % $ 11,291 19.76 % $ (34) (0.54) % For the year ended December 31, 2022, the difference relates primarily to non-deductible executive compensation expense and state taxes. For the year ended December 31, 2021, the difference relates primarily to a benefit from the permanent component of employee stock option exercises and state taxes. For the year ended December 31, 2020, the difference relates primarily the permanent component of employee stock option exercises. For the years ended December 31, 2021 and Decembers 31, 2020, the Company increased its valuation allowance relating to deferred tax assets associated with state net operating losses. As of December 31, 2022 and 2021, 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 2019 through 2021 remain subject to examination by the tax authorities. |
Earnings Per Share
Earnings Per Share | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share | |
Earnings Per Share | 17 The following table sets forth the computation of earnings per share of common stock: Year ended December 31, 2022 2021 2020 (in thousands, except shares and per share data) Net income $ 52,170 $ 45,847 $ 6,257 Weighted average common shares outstanding: Basic 25,243,397 25,459,514 24,872,251 Common Share equivalents 552,611 652,390 726,396 Diluted 25,796,008 26,111,904 25,598,647 Earnings per share: Basic $ 2.07 $ 1.80 $ 0.25 Diluted $ 2.02 $ 1.76 $ 0.24 Common share equivalents relate 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. |
Statutory financial information
Statutory financial information | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022, 2021 and 2020 and for the years then ended are summarized as follows: December 31, 2022 2021 2020 (in thousands) Statutory net income (loss) $ 76,222 $ 51,410 $ 1,753 Statutory capital and surplus 314,508 271,977 213,721 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, 2022 and 2021, 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, 2022 and 2021 was approximately $1.2 million and $1.2 million, respectively. Actual statutory capital and surplus at December 31, 2022 and 2021 was $15.6 million and $15.7 million, respectively. PSRE had statutory net income of $.2 million, $1.4 million and $0.9 million for 2022, 2021 and 2020, respectively. PSRE had stockholders’ equity of $15.5 million and $17.0 million on a GAAP basis at December 31, 2022 and 2021, respectively. The principal difference between statutory capital and surplus and stockholders’ equity presented in accordance with GAAP are prepaid expenses, which are non-admitted assets for Bermuda statutory purposes. In the third and fourth quarter of 2021, PSRE distributed $15.0 million and $10.0 million in dividends to the Company. No dividends were paid in 2022. 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, 2022 and 2021, the Company met the minimum liquidity ratio requirement. |
Dividend Restrictions
Dividend Restrictions | 12 Months Ended |
Dec. 31, 2022 | |
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 Under Arizona statute which 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. Based on the above restrictions, PESIC may not pay a dividend or distribution in 2023 without approval of the Arizona Insurance Commissioner due to incurring a statutory net loss in 2022. 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 2023 is calculated to be approximately $3.9 million. However, this dividend amount is subject to annual enhanced solvency requirement calculations. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022, the Company has six 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 a total of $5.7 million and may renew if the Company continues to assume premium from these insurance companies. The letters of credit are collateralized by either the Company’s available-for-sale investments or the Credit Agreement. In addition, the Company established a Regulation 114 Trust account for the benefit of ceding insurance companies to secure the unearned premium assumed by PSIC. As of December 31, 2022 the trust had a market value of $37.2 million. |
Schedule II
Schedule II | 12 Months Ended |
Dec. 31, 2022 | |
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, 2022 2021 Assets Investments: Fixed maturity securities available for sale, at fair value (amortized cost: $51,993 in 2022, $50,916 in 2021) $ 45,511 $ 49,221 Equity securities, at fair value: (cost: $1,725 in 2022, $1,725 in 2021) 1,626 1,839 Total investments 47,136 51,060 Cash and cash equivalents 781 4,437 Accrued investment income 320 313 Prepaid expenses and other assets 2,267 966 Receivables from subsidiaries 3,689 2,322 Investment in subsidiaries 405,524 365,018 Total assets $ 459,718 $ 424,116 Liabilities and Stockholders' equity Liabilities: Accounts payable and other liabilities $ 7,359 $ 4,672 Payables to subsidiaries 57,324 11,102 Federal income tax payable 10,282 10,265 Deferred tax liabilities — 3,908 Total liabilities 74,965 29,947 Stockholders' equity: Preferred stock, $0.0001 par value, 5,000,000 shares authorized as of December 31, 2022 and December 31, 2021, 0 shares issued and outstanding as of December 31, 2022 and December 31, 2021 — — Common stock, $0.0001 par value, 500,000,000 shares authorized, 25,027,467 and 25,428,929 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively 3 3 Additional paid‑in capital 333,557 318,902 Accumulated other comprehensive income (loss) (36,514) 5,312 Retained earnings 87,708 69,952 Total stockholders' equity 384,753 394,169 Total liabilities and stockholders' equity $ 459,718 $ 424,116 See accompanying notes. Schedule II Palomar Holdings, Inc. and Subsidiaries Statements of Income (Parent Company) (In Thousands) Year Ended December 31, 2022 2021 2020 Revenues: Net investment income $ 1,048 $ 555 $ 939 Net realized and unrealized gains (losses) on investments (320) 217 63 Total revenues 728 772 1,002 Expenses: Other operating expenses 33,292 19,480 8,696 Income (loss) before income taxes (32,564) (18,708) (7,694) Income tax expense (benefit) (8,464) 11,039 (34) Loss before equity in net income of subsidiaries (24,100) (29,747) (7,660) Equity in net income of subsidiaries 76,270 75,594 13,917 Net income 52,170 45,847 6,257 Other comprehensive income: Net unrealized gains (losses) on securities available for sale (3,997) 580 1,075 Equity in other comprehensive income (loss) of subsidiaries, net of taxes (37,830) (8,514) 7,485 Total comprehensive income $ 10,343 $ 37,913 $ 14,817 See accompanying notes. Schedule II Palomar Holdings, Inc. and Subsidiaries Statements of Cash Flows (Parent Company) (In Thousands) Year Ended December 31, 2022 2021 2020 Operating activities Net income $ 52,170 $ 45,847 $ 6,257 Adjustments to reconcile net income to net cash provided by operating activities: Equity in undistributed earnings of subsidiaries (76,270) (75,594) (13,917) Stock-based compensation expense 8,820 4,755 — Net realized and unrealized losses on investments 320 (217) (63) Amortization of premium on fixed maturity securities 347 443 350 Deferred income tax expense 7,210 634 1,094 Changes in operating assets and liabilities: 36,449 13,596 7,772 Net cash provided by (used in) operating activities 29,046 (10,536) 1,493 Investing activities Purchases of fixed maturity securities (9,807) (2,177) (71,048) Sales and maturities of fixed maturity securities 8,488 11,396 6,651 Cash paid to subsidiaries — (15,595) (59,789) Cash received from subsidiaries — 27,100 — Net cash provided by (used in) investing activities (1,319) 20,724 (124,186) Financing activities 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 3,032 2,811 2,782 Repurchase of common stock (34,415) (15,852) — Net cash provided by (used in) financing activities (31,383) (13,041) 128,329 Net (decrease) increase in cash and cash equivalents (3,656) (2,853) 5,636 Cash and cash equivalents at beginning of period 4,437 7,290 1,654 Cash and cash equivalents at end of period $ 781 $ 4,437 $ 7,290 Supplementary cash flow information: Cash paid for income taxes $ 18,890 $ 2,104 $ 7,182 Cash paid for interest $ 704 $ — $ — 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, 2022 | |
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, 2022 Valuation Allowance for deferred tax assets $ 2,879 $ 191 $ — $ 3,070 Valuation Allowance for premium receivable $ 315 $ 188 407 $ 96 Year Ended December 31, 2021 Valuation Allowance for deferred tax assets $ 680 $ 2,199 $ — $ 2879 Valuation Allowance for premium receivable $ 203 $ 285 173 $ 315 |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Significant Accounting Policies | |
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”). 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 Fronting Products, Inland Marine, Hawaii residential hurricane, Specialty Homeowners, Casualty, and Flood products. PSIC is licensed to underwrite insurance on an admitted basis in 37 states in the United States, as of December 31, 2022, 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 | 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. |
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. The Company’s allowance for credit losses related to its available-for-sale securities was immaterial as of December 31, 2022 and December 31, 2021. |
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. The Company recorded an allowance for uncollectable premiums of $0.1 million and $0.3 million as of December 31, 2022 and December 31, 2021, respectively, and believes that all other amounts are collectable. |
Earned Premiums | Earned Premiums 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, 2022 or 2021. |
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 or fronting fees and are shown as acquisition expenses in the accompanying consolidated statements of income and comprehensive income. |
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 2028. |
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 which the Company is amortizing over a period of 8 years. 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. No impairments of intangible assets were recognized for the years ended December 31, 2022, 2021 or 2020. |
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, 2022, 2021 or 2020. |
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. The Company also writes premiums under fronting agreements where it cedes the majority of premium and risk to reinsurers in exchange for a fronting fee. Reinsurance premiums, commissions, and 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 and fronting fees in connection with quota share and fronting reinsurance contracts. The ceding commissions and fronting fees 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, 2022 or December 31, 2021. |
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. The fair value of performance stock units containing employee service or company financial performance based conditions is determined using the closing price of the Company's common stock on the grant date. The fair value of performance stock units containing conditions based on performance of the Company’s stock is determined using a Monte Carlo simulation. 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, 2022 and 2021, 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, 2022, 2021, or 2020. |
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. |
Recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted | Recently adopted accounting pronouncements The Company has not adopted any new accounting guidance during the year ended December 31, 2022. Recently issued accounting pronouncements not yet adopted To date, there have been no recent accounting pronouncements not yet effective that have significance, or potential significance, to the Company’s consolidated financial statements. |
Investments (Tables)
Investments (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Investments | |
Schedule of available-for-sale investments | Gross Gross Amortized Unrealized Unrealized Fair December 31, 2022 Cost or Cost Gains Losses Value (in thousands) Fixed maturities: U.S. Governments $ 50,802 $ 2 $ (2,253) $ 48,551 States, territories, and possessions 5,857 49 (552) 5,354 Political subdivisions 4,919 — (621) 4,298 Special revenue excluding mortgage/asset-backed securities 37,260 26 (4,487) 32,799 Industrial and miscellaneous 278,164 79 (24,148) 254,095 Mortgage/asset-backed securities 184,578 251 (14,862) 169,967 Total available-for-sale investments $ 561,580 $ 407 $ (46,923) $ 515,064 Gross Gross Amortized Unrealized Unrealized Fair December 31, 2021 Cost or Cost Gains Losses Value (in thousands) Fixed maturities: U.S. Governments $ 16,713 $ 347 $ (190) $ 16,870 States, territories, and possessions 3,789 288 (63) 4,014 Political subdivisions 6,295 107 (22) 6,380 Special revenue excluding mortgage/asset-backed securities 43,301 1,273 (76) 44,498 Industrial and miscellaneous 245,064 5,873 (1,891) 249,046 Mortgage/asset-backed securities 110,960 1,377 (463) 111,874 Total available-for-sale investments $ 426,122 $ 9,265 $ (2,705) $ 432,682 |
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, 2022 Value Losses Value Losses Value Losses (in thousands) Fixed maturity securities: U.S. Governments $ 41,077 $ (1,523) $ 6,853 $ (730) $ 47,930 $ (2,253) States, territories, and possessions 3,227 (552) — — 3,227 (552) Political subdivisions 4,298 (621) — — 4,298 (621) Special revenue excluding mortgage/asset-backed securities 25,091 (3,287) 5,080 (1,200) 30,171 (4,487) Industrial and miscellaneous 192,185 (15,667) 55,605 (8,481) 247,790 (24,148) Mortgage/asset-backed securities 118,815 (9,908) 32,448 (4,954) 151,263 (14,862) Total $ 384,693 $ (31,558) $ 99,986 $ (15,365) $ 484,679 $ (46,923) Less Than 12 Months More Than 12 Months Total Fair Unrealized Fair Unrealized Fair Unrealized December 31, 2021 Value Losses Value Losses Value Losses (in thousands) Fixed maturity securities: U.S. Governments $ 5,968 $ (147) $ 1,457 $ (43) $ 7,425 $ (190) States, territories, and possessions 1,444 (63) — — 1,444 (63) Political subdivisions 1,815 (22) — — 1,815 (22) Special revenue excluding mortgage/asset-backed securities 6,280 (76) — — 6,280 (76) Industrial and miscellaneous 94,020 (1,468) 5,570 (423) 99,590 (1,891) Mortgage/asset-backed securities 51,246 (412) 2,319 (51) 53,565 (463) Total $ 160,773 $ (2,188) $ 9,346 $ (517) $ 170,119 $ (2,705) |
Schedule of contractual maturities of available-for-sale securities | Amortized Fair Cost Value (in thousands) Due within one year $ 41,686 $ 41,106 Due after one year through five years 182,785 170,399 Due after five years through ten years 126,990 112,822 Due after ten years 25,541 20,770 Mortgage and asset-backed securities 184,578 169,967 $ 561,580 $ 515,064 |
Schedule of change in unrealized gains (losses) of investments | Year Ended December 31, 2022 2021 2020 (in thousands) Change in net unrealized gains (losses) Fixed maturities $ (53,076) $ (10,148) $ 10,835 Net increase (decrease) $ (53,076) $ (10,148) $ 10,835 |
Schedule of net investment income | Year Ended December 31, 2022 2021 2020 (in thousands) Interest income $ 13,631 $ 9,119 $ 8,554 Dividend income 739 461 489 Investment management fees and expenses (493) (500) (431) Net investment income $ 13,877 $ 9,080 $ 8,612 |
Schedule of net realized and unrealized investment gains and losses | Year Ended December 31, 2022 2021 2020 (in thousands) Realized gains: Gains on sales of fixed maturity securities $ 14 $ 466 $ 501 Gains on sales of equity securities — 1,416 62 Total realized gains 14 1,882 563 Realized losses: Losses on sales of fixed maturity securities (2,340) (1) (46) Losses on sales of equity securities — — (68) Total realized losses (2,340) (1) (114) Net realized investment gains (losses) (2,326) 1,881 449 Net unrealized gains (losses) on equity securities (5,203) (604) 1,039 Net realized and unrealized gains (losses) on investments $ (7,529) $ 1,277 $ 1,488 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Measurements | |
Schedule of hierarchy for financial assets and liabilities measured at fair value | December 31, 2022 Level 1 Level 2 Level 3 Total (in thousands) Assets: Fixed maturity securities U.S. Governments $ — $ 48,551 $ — $ 48,551 States, territories, and possessions — 5,354 — 5,354 Political subdivisions — 4,298 — 4,298 Special revenue excluding mortgage/asset-backed securities — 32,799 — 32,799 Industrial and miscellaneous — 254,095 — 254,095 Mortgage/asset-backed securities — 169,967 — 169,967 Equity securities 38,576 — — 38,576 Cash, cash equivalents, and restricted cash 68,164 — — 68,164 Total assets $ 106,740 $ 515,064 $ — $ 621,804 December 31, 2021 Level 1 Level 2 Level 3 Total (in thousands) Assets: Fixed maturity securities U.S. Governments $ — $ 16,870 $ — $ 16,870 States, territories, and possessions — 4,014 — 4,014 Political subdivisions — 6,380 — 6,380 Special revenue excluding mortgage/asset-backed securities — 44,498 — 44,498 Industrial and miscellaneous — 249,046 — 249,046 Mortgage/asset-backed securities — 110,374 1,500 111,874 Equity securities 33,261 — — 33,261 Cash, cash equivalents, and restricted cash 50,371 — — 50,371 Total assets $ 83,632 $ 431,182 $ 1,500 $ 516,314 |
Policy Acquisition Costs (Table
Policy Acquisition Costs (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Policy Acquisition Costs | |
Schedule of policy acquisition costs deferred and amortized | Year ended December 31, 2022 2021 2020 (in thousands) Deferred Policy Acquisition Costs: Balance, beginning of year $ 55,953 $ 35,481 $ 25,201 Additions to deferred balance: Direct commissions 209,061 133,242 82,786 Ceding commissions and fronting fees (109,302) (32,249) (19,371) Premium taxes 10,166 8,209 7,024 Total net additions 109,925 109,202 70,439 Amortization of net policy acquisition costs (109,138) (88,730) (60,159) Balance, end of year $ 56,740 $ 55,953 $ 35,481 Acquisition expenses: Amortization of net policy acquisition costs $ 109,138 $ 88,730 $ 60,159 Period costs 1,633 6,703 3,882 Total Acquisition expenses $ 110,771 $ 95,433 $ 64,041 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Intangible Assets | |
Schedule of intangible assets, indefinite-lived | December 31, 2022 2021 (in thousands) Indefinite-lived intangibles: State insurance licenses $ 744 $ 744 Finite-lived intangibles: Customer relationships 10,023 10,008 Accumulated amortization on finite-lived intangibles (2,506) (1,251) Total intangible assets $ 8,261 $ 9,501 |
Schedule of intangible assets, finite-lived | December 31, 2022 2021 (in thousands) Indefinite-lived intangibles: State insurance licenses $ 744 $ 744 Finite-lived intangibles: Customer relationships 10,023 10,008 Accumulated amortization on finite-lived intangibles (2,506) (1,251) Total intangible assets $ 8,261 $ 9,501 |
Capitalized Assets (Tables)
Capitalized Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Capitalized Assets | |
Schedule of capitalized assets | Accumulated Net December 31, 2022 Cost Amortization Book Value (in thousands) Capitalized Software $ 18,622 $ (6,303) $ 12,319 Accumulated Net December 31, 2021 Cost Amortization Book Value (in thousands) Capitalized Software $ 13,205 $ (3,831) $ 9,374 Accumulated Net December 31, 2022 Cost Depreciation Book Value (in thousands) Leasehold improvements $ 879 $ (694) $ 185 Computer hardware 402 (205) 197 Office equipment and furniture 724 (503) 221 Total $ 2,005 $ (1,402) $ 603 Accumulated Net December 31, 2021 Cost Depreciation Book Value (in thousands) Leasehold improvements $ 879 $ (576) $ 303 Computer hardware 294 (148) 146 Office equipment and furniture 519 (441) 78 Total $ 1,692 $ (1,165) $ 527 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
Schedule of leases | Year ended December 31, 2022 (in thousands) Operating cash outflows from operating leases $ 922 December 31, 2022 ($ in thousands) Operating lease ROU assets $ 1,688 Operating lease liabilities $ 2,066 Weighted-average remaining lease term on operating leases 2.7 years Weighted-average discount rate on operating leases 1.4 % |
Schedule of future minimum lease payments | Years ending December 31, (in thousands) 2023 966 2024 640 2025 168 2026 173 2027 240 2028 — Total future minimum lease payments $ 2,187 Less: imputed interest (121) Total operating lease liability $ 2,066 |
Reserve for Losses and Loss A_2
Reserve for Losses and Loss Adjustment Expenses (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Claims Development | |
Schedule of reconciliation of changes in the ending reserve balances for losses and loss adjustment expenses ("LAE") | Year Ended December 31, 2022 2021 2020 (in thousands) Reserve for losses and loss adjustment expenses net of reinsurance recoverables at beginning of period $ 45,419 $ 34,470 $ 3,869 Add: Incurred losses and loss adjustment expenses, net of reinsurance, related to: Current year 76,289 45,042 64,179 Prior years 2,383 (3,585) (64) Total incurred 78,672 41,457 64,115 Deduct: Loss and loss adjustment expense payments, net of reinsurance, related to: Current year 21,802 12,063 31,879 Prior years 24,769 18,445 1,635 Total payments 46,571 30,508 33,514 Reserve for losses and loss adjustment expense net of reinsurance recoverables at end of period 77,520 45,419 34,470 Add: Reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period 153,895 127,947 94,566 Reserve for losses and loss adjustment expenses gross of reinsurance recoverables on unpaid losses and loss adjustment expenses at end of period $ 231,415 $ 173,366 $ 129,036 |
Schedule of reconciliation of the net incurred and paid claims development tables to the liability for claims and claim adjustment expenses | 2022 (in thousands) Net outstanding liabilities: Homeowners’ insurance $ 2,778 Special property 34,334 Reinsurance- Nonproportional assumed property(1) 8,568 Other 31,840 Reserve for losses and loss adjustment expense, net of reinsurance 77,520 Reinsurance recoverable on unpaid claims: Homeowners’ insurance $ 11,339 Special property 97,231 Other 45,325 Total reinsurance recoverable on unpaid claims 153,895 Total reserve for losses and loss adjustment expenses $ 231,415 (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 . |
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, 2022 Incurred but Cumulative Year Ended December 31, Not Reported Number of Accident Year 2015(1) 2016(1) 2017(1) 2018(1) 2019(1) 2020(1) 2021(1) 2022 Liabilities Claims 2015 $ 2,048 $ 1,785 $ 1,658 $ 1,636 $ 1,642 $ 1,636 $ 1,643 $ 1,612 $ — 567 2016 6,069 5,878 5,721 5,636 5,622 5,609 5,604 — 1,357 2017 9,354 7,418 6,630 6,388 5,587 5,681 11 3,516 2018 2,193 2,008 1,930 1,929 1,529 — 1,017 2019 914 838 807 676 36 1,386 2020 19,100 15,088 13,715 106 4,451 2021 8,453 5,765 — 4,081 2022 7,237 1,000 2,149 Total $ 41,819 $ 1,153 18,524 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(1) 2020(1) 2021(1) 2022 2015 $ 860 $ 1,379 $ 1,523 $ 1,615 $ 1,634 $ 1,636 $ 1,643 $ 1,612 2016 4,120 5,356 5,585 5,607 5,619 5,609 5,604 2017 7,135 7,375 6,628 6,371 5,586 5,649 2018 1,550 1,853 1,922 1,922 1,529 2019 546 685 685 704 2020 13,588 13,095 13,161 2021 4,351 5,472 2022 5,310 Total $ 39,041 Reserve for losses and loss adjustment expense, net of reinsurance $ 2,778 (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 (2) Year 6 Year 7 Year 8 (2) Payout percentage 85.32 % 16.39 % 0.81 % 0.88 % (9.53) % 0.35 % 0.17 % (1.92) (2) Negative payout percentages are due to timing of reinsurance payments, allocations of reinsurance between different lines of business based on actual results, and allocation of reinsurance to different periods for reinsurance treaties in effect for multiple periods. These are primarily associated with larger recoveries from catastrophe events in earlier years of operation. |
Special Property | |
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, 2022 Incurred but Cumulative Year Ended December 31, Not Reported Number of Accident Year 2015(1) 2016(1) 2017(1) 2018(1) 2019(1) 2020(1) 2021(1) 2022 Liabilities Claims 2015 $ 630 $ 719 $ 671 $ 671 $ 678 $ 677 $ 673 $ 692 $ — 6 2016 1,381 1,249 1,251 1,454 1,453 1,453 1,521 — 26 2017 3,071 3,475 4,014 4,264 4,974 4,987 — 110 2018 5,970 6,095 6,009 6,021 6,412 — 176 2019 3,661 3,385 3,140 3,617 62 294 2020 42,334 42,160 45,850 2,263 960 2021 21,383 19,393 758 1386 2022 35,650 10,515 1,425 Total $ 118,122 $ 13,598 4,383 Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance Special Property Insurance (in thousands) Accident Year 2015(1) 2016(1) 2017(1) 2018(1) 2019(1) 2020(1) 2021(1) 2022 2015 $ 265 $ 438 $ 586 $ 626 $ 666 $ 673 $ 673 $ 692 2016 703 1,064 1,216 1,444 1,453 1,453 1,521 2017 1,967 3,344 4,011 4,269 4,974 4,987 2018 2,859 6,036 6,009 6,021 6,414 2019 1,633 2,825 3,072 3,466 2020 18,274 36,127 42,343 2021 7,004 17,028 2022 7,337 Total 83,788 Reserve for losses and loss adjustment expense, net of reinsurance 34,334 (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 Year 7 Year 8 Payout percentage 38.78 % 35.64 % 10.79 % 7.40 % 6.66 % 0.42 % 2.24 % 2.70 % |
Reinsurance (Tables)
Reinsurance (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Reinsurance | |
Schedule of ceded written premiums under quota share arrangements by line of business for certain quota shares | The following table shows ceded written premiums under fronting and quota share arrangements by line of business for the years ended December 31, 2022, 2021 and 2020: Year Ended December 31, 2022 2021 2020 (in thousands) Fronting $ 237,285 $ 11,001 $ — Inland Marine 63,627 28,389 5,339 Specialty Homeowners 4,946 27,394 22,295 Commercial Earthquake 20,467 14,447 6,929 Commercial All Risk 6,260 3,948 19,218 Others 32,609 10,822 5,495 Total $ 365,193 $ 96,001 $ 59,276 |
Schedule of effect of reinsurance on premiums written and earned and on losses and LAE incurred | 2022 2021 2020 Written Earned Written Earned Written Earned (in thousands) Premiums Written and Earned: Direct $ 816,387 $ 628,973 $ 467,424 $ 384,463 $ 324,253 $ 271,887 Assumed 65,481 66,299 67,751 49,535 30,107 29,569 Ceded (524,575) (378,806) (223,443) (200,172) (155,102) (146,388) Net $ 357,293 $ 316,466 $ 311,732 $ 233,826 $ 199,258 $ 155,068 2022 Losses LAE Total (in thousands) Losses and LAE Incurred: Direct $ 133,517 $ 38,004 $ 171,521 Assumed 23,574 5,998 29,572 Ceded (91,261) (31,159) (122,421) Net $ 65,829 $ 12,843 $ 78,672 2021 Losses LAE Total (in thousands) Losses and LAE Incurred: Direct $ 168,292 $ 13,295 $ 181,587 Assumed 17,184 1,926 19,110 Ceded (148,106) (11,134) (159,240) Net $ 37,370 $ 4,087 $ 41,457 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 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity | |
Schedule of common stock reserved for future issuance | Stock options outstanding under 2019 Equity Incentive Plan 882,892 Restricted stock units outstanding under 2019 Equity Incentive Plan 271,951 Performance stock units outstanding under 2019 Equity Incentive Plan 383,103 Shares authorized for future issuance under 2019 Equity Incentive Plan 2,594,587 Shares authorized for future issuance under 2019 Employee Stock Purchase Plan 907,850 Total 5,040,383 |
Schedule of stock-based compensation expense | Year ended December 31, 2022 2021 2020 (in thousands) Stock-Based Compensation Expense $ 11,624 $ 5,584 $ 2,167 |
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, 2022 933,051 $ 29.41 7.59 $ 36,679 Options granted 122,539 51.99 Options exercised (148,427) 15.31 Options canceled (24,271) 68.13 Outstanding at December 31, 2022 882,892 $ 33.85 6.92 $ 16,990 Vested and Exercisable at December 31, 2022 658,858 $ 26.33 6.48 $ 16,001 |
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, 2022 2021 2020 (in thousands) Risk free rate of return (1) 1.69% - 4.23% 0.57% - 1.35% 0.32% - 1.52% Expected share price volatility (2) 39.73% - 43.03% 26.06% - 39.41% 18.13% - 25.67% Expected life in years (3) 5.89 5.89 5.63 - 6.08 Dividend yield (4) 0% 0% 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 does not currently plan to issue dividends. |
Schedule of RSU transactions | Weighted-average Number of grant date shares fair value Non vested outstanding at January 1, 2022 235,696 $ 79.33 Granted 100,106 51.53 Vested (57,536) 80.60 Forfeited (6,315) 76.30 Non vested outstanding at December 31, 2022 271,951 $ 68.90 |
Schedule of Performance stock unit transactions | Weighted-average Number of grant date shares fair value Non vested outstanding at January 1, 2022 358,401 $ 36.87 Granted 26,165 50.36 Vested — — Forfeited (1,463) 80.69 Non vested outstanding at December 31, 2022 383,103 $ 37.62 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Income (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accumulated Other Comprehensive Income | |
Schedule of changes in accumulated other comprehensive income (AOCI) | Year Ended December 31, 2022 2021 2020 (in thousands) Balance as of January 1 $ 5,312 $ 13,246 $ 4,686 Other comprehensive income (loss) before reclassification (55,270) (9,579) 11,292 Federal income tax (expense) benefit 11,607 2,012 (2,371) Other comprehensive income (loss) before reclassification, net of tax (43,663) (7,567) 8,921 Amounts reclassified from AOCI 2,325 (464) (456) Federal income tax expense (benefit) (489) 97 95 Amounts reclassified from AOCI, net of tax 1,836 (367) (361) Other comprehensive income (loss) (41,827) (7,934) 8,560 Balance at end of period $ (36,515) $ 5,312 $ 13,246 |
Underwriting Information (Table
Underwriting Information (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Underwriting Information | |
Schedule of gross written premiums | Year Ended December 31, 2022 2021 2020 ($ in thousands) % of % of % of Amount GWP Amount GWP Amount GWP Product Fronting $ 223,249 25.3 % $ 11,459 2.2 % $ - NM Residential Earthquake 213,803 24.2 % 171,048 32.0 % 140,934 39.8 % Commercial Earthquake 131,677 14.9 % 90,552 16.9 % 58,890 16.6 % Inland Marine 105,068 11.9 % 57,124 10.7 % 15,423 4.3 % Commercial All Risk 51,671 5.9 % 38,640 7.2 % 53,933 15.2 % Casualty 35,791 4.1 % 9,584 1.9 % — NM Hawaii Hurricane 32,967 3.7 % 30,298 5.6 % 13,824 3.9 % Specialty Homeowners 29,959 3.4 % 67,894 12.7 % 49,849 14.1 % Residential Flood 14,539 1.7 % 11,652 2.2 % 8,176 2.3 % Other 43,144 4.9 % 46,924 8.6 % 13,331 3.8 % Total Gross Written Premiums $ 881,868 100.0 % $ 535,175 100.0 % $ 354,360 100.0 % NM-Not Meaningful Gross written premiums by state are as follows: Year Ended December 31, 2022 2021 2020 ($ in thousands) % of % of % of Amount GWP Amount GWP Amount GWP State California $ 418,809 47.5 % $ 244,416 45.6 % $ 172,765 48.8 % Texas 90,459 10.3 % 62,893 11.8 % 67,974 19.2 % Washington 41,827 4.7 % 23,608 4.4 % 14,328 4.0 % Hawaii 40,157 4.5 % 34,993 6.5 % 16,398 4.6 % Florida 38,715 4.4 % 27,386 5.1 % 5,795 1.7 % Oregon 24,108 2.7 % 13,677 2.6 % 10,038 2.8 % Illinois 17,368 2.0 % 12,133 2.3 % 6,133 1.7 % North Carolina 12,776 1.5 % 15,271 2.9 % 11,143 3.1 % Other 197,649 22.4 % 100,798 18.8 % 49,786 14.1 % Total Gross Written Premiums $ 881,868 100.0 % $ 535,175 100.0 % $ 354,360 100.0 % Gross written premiums by insurance subsidiary are as follows: Year Ended December 31, 2022 2021 2020 ($ in thousands) % of % of % of Amount GWP Amount GWP Amount GWP Subsidiary PSIC $ 489,720 55.5 % $ 383,064 71.6 % $ 324,870 91.7 % PESIC 392,148 44.5 % 152,111 28.4 % 29,490 8.3 % Total Gross Written Premiums $ 881,868 100.0 % $ 535,175 100.0 % $ 354,360 100.0 % |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Schedule of federal income tax expense (benefit) | December 31, 2022 2021 2020 (in thousands) Current $ 18,842 $ 10,650 $ (1,128) Deferred (3,461) 641 1,094 Income tax expense (benefit) $ 15,381 $ 11,291 $ (34) |
Schedule of deferred tax assets and liabilities | December 31, 2022 2021 (in thousands) Deferred tax assets: Losses and LAE reserve discount $ 680 $ 279 State tax net operating losses 3,070 2,879 Deferred Intercompany 656 — Unearned premiums 11,258 9,569 Capitalized organizational costs 184 214 Unrealized losses on investments 9,891 — Deferred compensation 1,585 997 Other 1,544 1,285 Total deferred tax assets $ 28,868 $ 15,223 Deferred tax liabilities: Deferred acquisition costs $ (11,922) $ (11,754) Unrealized gains on investments — (1,612) Internally developed software (1,520) (1,969) Other (1,734) (919) Total deferred tax liabilities (15,176) (16,254) Net deferred tax asset (liability) before valuation allowance 13,692 (1,031) Valuation allowance (3,070) (2,879) Total net deferred tax assets (liabilities) $ 10,622 $ (3,910) |
Schedule of effective tax rate | Years Ended December 31, 2022 2021 2020 ($ in thousands) Expense computed at federal tax rate $ 14,186 21.00 % $ 11,999 21.00 % $ 1,321 21.00 % Stock-based compensation 153 0.23 % (1,067) (1.87) % (1,538) (24.44) % Dividend received deduction and tax‑exempt interest (101) (0.15) % (81) (0.14) % (67) (1.06) % Valuation allowance 191 0.28 % 2,199 3.85 % 606 9.63 % Other 952 1.41 % (1,759) (3.08) % (356) (5.67) % Income tax expense (benefit) $ 15,381 22.77 % $ 11,291 19.76 % $ (34) (0.54) % |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Earnings Per Share | |
Schedule of earnings per share of common stock | Year ended December 31, 2022 2021 2020 (in thousands, except shares and per share data) Net income $ 52,170 $ 45,847 $ 6,257 Weighted average common shares outstanding: Basic 25,243,397 25,459,514 24,872,251 Common Share equivalents 552,611 652,390 726,396 Diluted 25,796,008 26,111,904 25,598,647 Earnings per share: Basic $ 2.07 $ 1.80 $ 0.25 Diluted $ 2.02 $ 1.76 $ 0.24 |
Statutory financial informati_2
Statutory financial information (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Statutory financial information | |
Summary of statutory net income and statutory capital surplus | December 31, 2022 2021 2020 (in thousands) Statutory net income (loss) $ 76,222 $ 51,410 $ 1,753 Statutory capital and surplus 314,508 271,977 213,721 |
Summary of Operations and Bas_2
Summary of Operations and Basis of Presentation - Summary of Operations (Details) | 12 Months Ended |
Dec. 31, 2022 state | |
Summary of Operations and Basis of Presentation | |
Number states Company underwrites catastrophe insurance on an admitted basis | 37 |
Significant Accounting Polici_3
Significant Accounting Policies - Premiums Receivable (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Premiums Receivable | ||
Allowance for doubtful accounts | $ 0.1 | $ 0.3 |
Significant Accounting Polici_4
Significant Accounting Policies - Premiums Earned (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Significant Accounting Policies | ||
Premium deficiency | $ 0 | $ 0 |
Significant Accounting Polici_5
Significant Accounting Policies - Property and Equipment (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Minimum | |
Property and Equipment | |
Useful life | 3 years |
Maximum | |
Property and Equipment | |
Useful life | 5 years |
Significant Accounting Polici_6
Significant Accounting Policies - Intangible Assets (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Intangible Assets | |||
Impairments of intangible assets | $ 0 | $ 0 | $ 0 |
Customer Relationships | |||
Intangible Assets | |||
Finite-lived intangible asset, useful life | 8 years |
Significant Accounting Polici_7
Significant Accounting Policies - Impairment of Long-lived Assets (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Impairment of Long-lived Assets | |||
Impairments of long-lived assets | $ 0 | $ 0 | $ 0 |
Investments - Available for Sal
Investments - Available for Sale Investments (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Available for sale investments | ||
Amortized Cost | $ 561,580 | $ 426,122 |
Gross Unrealized Gains | 407 | 9,265 |
Gross Unrealized Losses | (46,923) | (2,705) |
Fair Value | 515,064 | 432,682 |
U.S. Governments | ||
Available for sale investments | ||
Amortized Cost | 50,802 | 16,713 |
Gross Unrealized Gains | 2 | 347 |
Gross Unrealized Losses | (2,253) | (190) |
Fair Value | 48,551 | 16,870 |
States, territories, and possessions | ||
Available for sale investments | ||
Amortized Cost | 5,857 | 3,789 |
Gross Unrealized Gains | 49 | 288 |
Gross Unrealized Losses | (552) | (63) |
Fair Value | 5,354 | 4,014 |
Political subdivisions | ||
Available for sale investments | ||
Amortized Cost | 4,919 | 6,295 |
Gross Unrealized Gains | 107 | |
Gross Unrealized Losses | (621) | (22) |
Fair Value | 4,298 | 6,380 |
Special revenue excluding mortgage/asset-backed securities | ||
Available for sale investments | ||
Amortized Cost | 37,260 | 43,301 |
Gross Unrealized Gains | 26 | 1,273 |
Gross Unrealized Losses | (4,487) | (76) |
Fair Value | 32,799 | 44,498 |
Industrial and miscellaneous | ||
Available for sale investments | ||
Amortized Cost | 278,164 | 245,064 |
Gross Unrealized Gains | 79 | 5,873 |
Gross Unrealized Losses | (24,148) | (1,891) |
Fair Value | 254,095 | 249,046 |
Mortgage/asset-backed securities | ||
Available for sale investments | ||
Amortized Cost | 184,578 | 110,960 |
Gross Unrealized Gains | 251 | 1,377 |
Gross Unrealized Losses | (14,862) | (463) |
Fair Value | $ 169,967 | $ 111,874 |
Investments - Security Holdings
Investments - Security Holdings in an Unrealized Loss Position - General Information (Details) $ in Thousands | Dec. 31, 2022 USD ($) security | Dec. 31, 2021 USD ($) security |
Number of positions: | ||
Number of unrealized loss positions | security | 543 | 231 |
Fair Value | ||
Fair Value | $ 484,679 | $ 170,119 |
Unrealized Losses | ||
Unrealized Losses | $ 46,923 | $ 2,705 |
Investments - Security Holdin_2
Investments - Security Holdings in an Unrealized Loss Position - Tabular Disclosure (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Fair Value | ||
Fair Value - Less Than 12 Months | $ 384,693 | $ 160,773 |
Fair Value - More Than 12 Months | 99,986 | 9,346 |
Fair Value - Total | 484,679 | 170,119 |
Unrealized Losses | ||
Unrealized Losses - Less Than 12 Months | (31,558) | (2,188) |
Unrealized Losses - More Than 12 Months | (15,365) | (517) |
Unrealized Losses - Total | (46,923) | (2,705) |
U.S. Governments | ||
Fair Value | ||
Fair Value - Less Than 12 Months | 41,077 | 5,968 |
Fair Value - More Than 12 Months | 6,853 | 1,457 |
Fair Value - Total | 47,930 | 7,425 |
Unrealized Losses | ||
Unrealized Losses - Less Than 12 Months | (1,523) | (147) |
Unrealized Losses - More Than 12 Months | (730) | (43) |
Unrealized Losses - Total | (2,253) | (190) |
States, territories, and possessions | ||
Fair Value | ||
Fair Value - Less Than 12 Months | 3,227 | 1,444 |
Fair Value - Total | 3,227 | 1,444 |
Unrealized Losses | ||
Unrealized Losses - Less Than 12 Months | (552) | (63) |
Unrealized Losses - Total | (552) | (63) |
Political subdivisions | ||
Fair Value | ||
Fair Value - Less Than 12 Months | 4,298 | 1,815 |
Fair Value - Total | 4,298 | 1,815 |
Unrealized Losses | ||
Unrealized Losses - Less Than 12 Months | (621) | (22) |
Unrealized Losses - Total | (621) | (22) |
Special revenue excluding mortgage/asset-backed securities | ||
Fair Value | ||
Fair Value - Less Than 12 Months | 25,091 | 6,280 |
Fair Value - More Than 12 Months | 5,080 | |
Fair Value - Total | 30,171 | 6,280 |
Unrealized Losses | ||
Unrealized Losses - Less Than 12 Months | (3,287) | (76) |
Unrealized Losses - More Than 12 Months | (1,200) | |
Unrealized Losses - Total | (4,487) | (76) |
Industrial and miscellaneous | ||
Fair Value | ||
Fair Value - Less Than 12 Months | 192,185 | 94,020 |
Fair Value - More Than 12 Months | 55,605 | 5,570 |
Fair Value - Total | 247,790 | 99,590 |
Unrealized Losses | ||
Unrealized Losses - Less Than 12 Months | (15,667) | (1,468) |
Unrealized Losses - More Than 12 Months | (8,481) | (423) |
Unrealized Losses - Total | (24,148) | (1,891) |
Mortgage/asset-backed securities | ||
Fair Value | ||
Fair Value - Less Than 12 Months | 118,815 | 51,246 |
Fair Value - More Than 12 Months | 32,448 | 2,319 |
Fair Value - Total | 151,263 | 53,565 |
Unrealized Losses | ||
Unrealized Losses - Less Than 12 Months | (9,908) | (412) |
Unrealized Losses - More Than 12 Months | (4,954) | (51) |
Unrealized Losses - Total | $ (14,862) | $ (463) |
Investments - Contractual Matur
Investments - Contractual Maturities of Available for Sale Fixed Maturity Securities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Amortized Cost | ||
Due within one year | $ 41,686 | |
Due after one year through five years | 182,785 | |
Due after five years through ten years | 126,990 | |
Due after ten years | 25,541 | |
Mortgage and asset-backed securities | 184,578 | |
Amortized Cost | 561,580 | $ 426,122 |
Fair Value | ||
Due within one year | 41,106 | |
Due after one year through five years | 170,399 | |
Due after five years through ten years | 112,822 | |
Due after ten years | 20,770 | |
Mortgage and asset-backed securities | 169,967 | |
Fair Value | $ 515,064 | $ 432,682 |
Investments - Change in Unreali
Investments - Change in Unrealized Gains (Losses) of Investments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Debt and Equity Securities, Unrealized Gain (Loss) [Abstract] | |||
Change in net unrealized gains (losses) on fixed maturities | $ (53,076) | $ (10,148) | $ 10,835 |
Change in net unrealized gains (losses) | $ (53,076) | $ (10,148) | $ 10,835 |
Investments - Net Investment In
Investments - Net Investment Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Net investment income | |||
Interest income | $ 13,631 | $ 9,119 | $ 8,554 |
Dividend income | 739 | 461 | 489 |
Investment management fees and expenses | (493) | (500) | (431) |
Net investment income | $ 13,877 | $ 9,080 | $ 8,612 |
Investments - Net Realized and
Investments - Net Realized and Unrealized Investment Gains and Losses (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Net realized and unrealized investment gains and losses | |||
Gains on sales of fixed maturity securities | $ 14 | $ 466 | $ 501 |
Gains on sales of equity securities | 1,416 | 62 | |
Total realized gains | 14 | 1,882 | 563 |
Losses on sales of fixed maturity securities | (2,340) | (1) | (46) |
Losses on sales of equity securities | (68) | ||
Total realized losses | (2,340) | (1) | (114) |
Net realized investment gains | (2,326) | 1,881 | 449 |
Net unrealized gains (losses) on equity securities | (5,203) | (604) | 1,039 |
Net realized and unrealized gains (losses) on investments | (7,529) | 1,277 | 1,488 |
Proceeds from sales of fixed maturity securities | |||
Proceeds from the sale of fixed maturity securities | $ 19,700 | $ 17,400 | $ 39,800 |
Investments - Securities on Dep
Investments - Securities on Deposit (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Investments | ||
Fair Value | $ 515,064 | $ 432,682 |
Securities on deposit with state regulatory authorities | ||
Investments | ||
Fair Value | $ 8,500 | $ 7,500 |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Assets: | ||
Fair Value | $ 515,064 | $ 432,682 |
Equity securities, at fair value: (cost: $1,724 in 2021, $1,661 in 2020) | 38,576 | 33,261 |
U.S. Governments | ||
Assets: | ||
Fair Value | 48,551 | 16,870 |
States, territories, and possessions | ||
Assets: | ||
Fair Value | 5,354 | 4,014 |
Political subdivisions | ||
Assets: | ||
Fair Value | 4,298 | 6,380 |
Special revenue excluding mortgage/asset-backed securities | ||
Assets: | ||
Fair Value | 32,799 | 44,498 |
Industrial and miscellaneous | ||
Assets: | ||
Fair Value | 254,095 | 249,046 |
Mortgage/asset-backed securities | ||
Assets: | ||
Fair Value | 169,967 | 111,874 |
Fair Value, Measurements, Recurring | ||
Assets: | ||
Equity securities, at fair value: (cost: $1,724 in 2021, $1,661 in 2020) | 38,576 | 33,261 |
Cash, cash equivalents, and restricted cash | 68,164 | 50,371 |
Total assets | 621,804 | 516,314 |
Fair Value, Measurements, Recurring | U.S. Governments | ||
Assets: | ||
Fair Value | 48,551 | 16,870 |
Fair Value, Measurements, Recurring | States, territories, and possessions | ||
Assets: | ||
Fair Value | 5,354 | 4,014 |
Fair Value, Measurements, Recurring | Political subdivisions | ||
Assets: | ||
Fair Value | 4,298 | 6,380 |
Fair Value, Measurements, Recurring | Special revenue excluding mortgage/asset-backed securities | ||
Assets: | ||
Fair Value | 32,799 | 44,498 |
Fair Value, Measurements, Recurring | Industrial and miscellaneous | ||
Assets: | ||
Fair Value | 254,095 | 249,046 |
Fair Value, Measurements, Recurring | Mortgage/asset-backed securities | ||
Assets: | ||
Fair Value | 169,967 | 111,874 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 1 | ||
Assets: | ||
Equity securities, at fair value: (cost: $1,724 in 2021, $1,661 in 2020) | 38,576 | 33,261 |
Cash, cash equivalents, and restricted cash | 68,164 | 50,371 |
Total assets | 106,740 | 83,632 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | ||
Assets: | ||
Total assets | 515,064 | 431,182 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | U.S. Governments | ||
Assets: | ||
Fair Value | 48,551 | 16,870 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | States, territories, and possessions | ||
Assets: | ||
Fair Value | 5,354 | 4,014 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Political subdivisions | ||
Assets: | ||
Fair Value | 4,298 | 6,380 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Special revenue excluding mortgage/asset-backed securities | ||
Assets: | ||
Fair Value | 32,799 | 44,498 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Industrial and miscellaneous | ||
Assets: | ||
Fair Value | 254,095 | 249,046 |
Fair Value, Measurements, Recurring | Fair Value, Inputs, Level 2 | Mortgage/asset-backed securities | ||
Assets: | ||
Fair Value | $ 169,967 | 110,374 |
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 - Asset
Fair Value Measurements - Assets Measured on Recurring Basis, Unobservable Input Reconciliation (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Fair Value Measurements | ||
Fixed income securities classified as Level 3 | $ 0 | $ 1,500 |
Policy Acquisition Costs (Detai
Policy Acquisition Costs (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Deferred Policy Acquisition Costs: | |||
Balance, beginning of year | $ 55,953 | $ 35,481 | $ 25,201 |
Direct commissions | 209,061 | 133,242 | 82,786 |
Ceding commissions and fronting fees | (109,302) | (32,249) | (19,371) |
Premium taxes | 10,166 | 8,209 | 7,024 |
Total net additions | 109,925 | 109,202 | 70,439 |
Amortization of net policy acquisition costs | (109,138) | (88,730) | (60,159) |
Balance, end of year | 56,740 | 55,953 | 35,481 |
Acquisition expenses: | |||
Amortization of net policy acquisition costs | 109,138 | 88,730 | 60,159 |
Period costs | 1,633 | 6,703 | 3,882 |
Total Acquisition expenses | $ 110,771 | $ 95,433 | $ 64,041 |
Intangible Assets - Tabular Dis
Intangible Assets - Tabular Disclosure (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Indefinite-lived intangibles: | ||
State insurance licenses | $ 744 | $ 744 |
Finite-lived intangibles: | ||
Customer relationships | 10,023 | 10,008 |
Accumulated amortization on finite-lived intangibles | (2,506) | (1,251) |
Total intangible assets | $ 8,261 | $ 9,501 |
Intangible Assets - Useful Live
Intangible Assets - Useful Lives (Details) - Customer Relationships $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Finite-lived intangibles: | |
Finite-lived intangible asset, useful life | 8 years |
Amortization expense | $ 1.3 |
Capitalized Assets - Capitalize
Capitalized Assets - Capitalized Software - Tabular Disclosure (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Capitalized software | ||
Cost | $ 18,622 | $ 13,205 |
Accumulated Amortization | (6,303) | (3,831) |
Net Book Value | $ 12,319 | $ 9,374 |
Capitalized Assets - Capitali_2
Capitalized Assets - Capitalized Software - Amortization Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Capitalized Assets | |||
Amortization expense relating to capitalized software | $ 2.6 | $ 2.1 | $ 1.1 |
Capitalized Assets - Property a
Capitalized Assets - Property and Equipment - Tabular Disclosure (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Property and Equipment | ||
Cost | $ 2,005 | $ 1,692 |
Accumulated Depreciation | (1,402) | (1,165) |
Net Book Value | 603 | 527 |
Leasehold improvements | ||
Property and Equipment | ||
Cost | 879 | 879 |
Accumulated Depreciation | (694) | (576) |
Net Book Value | 185 | 303 |
Computer hardware | ||
Property and Equipment | ||
Cost | 402 | 294 |
Accumulated Depreciation | (205) | (148) |
Net Book Value | 197 | 146 |
Office equipment and furniture | ||
Property and Equipment | ||
Cost | 724 | 519 |
Accumulated Depreciation | (503) | (441) |
Net Book Value | $ 221 | $ 78 |
Capitalized Assets - Property_2
Capitalized Assets - Property and Equipment - Amortization Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
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, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Lease, cost | |||
Operating lease costs | $ 0.8 | $ 0.7 | $ 0.7 |
Leases - Additional Information
Leases - Additional Information (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Leases | |
Operating cash outflows from operating leases | $ 922 |
Leases - Assets and Liabilities
Leases - Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Assets and liabilities | ||
Operating lease ROU assets | $ 1,688 | |
Operating Lease, Right-of-Use Asset, Statement of Financial Position | Prepaid expenses and other assets | Prepaid expenses and other assets |
Operating lease, liability | ||
Operating lease liabilities | $ 2,066 | |
Operating Lease, Liability, Statement of Financial Position | Accounts payable and other accrued liabilities | Accounts payable and other accrued liabilities |
Leases - Weighted-average Discl
Leases - Weighted-average Disclosures (Details) | Dec. 31, 2022 |
Leases | |
Weighted-average remaining lease term on operating leases | 2 years 8 months 12 days |
Weighted-average discount rate on operating leases (as a percent) | 1.40% |
Leases - Future Minimum Lease P
Leases - Future Minimum Lease Payments (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Future minimum lease payments | |
2023 | $ 966 |
2024 | 640 |
2025 | 168 |
2026 | 173 |
2027 | 240 |
Total future minimum lease payments | $ 2,187 |
Leases - Gross Difference (Deta
Leases - Gross Difference (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Leases | |
Total future minimum lease payments | $ 2,187 |
Less: imputed interest | (121) |
Total operating lease liability | $ 2,066 |
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, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Reserve for Losses and Loss Adjustment Expenses | |||
Reserve for losses and LAE net of reinsurance recoverables at beginning of period | $ 45,419 | $ 34,470 | $ 3,869 |
Add: Incurred losses and LAE, net of reinsurance, related to: | |||
Current year | 76,289 | 45,042 | 64,179 |
Prior years | 2,383 | (3,585) | (64) |
Total incurred | 78,672 | 41,457 | 64,115 |
Deduct: Loss and LAE payments, net of reinsurance, related to: | |||
Current year | 21,802 | 12,063 | 31,879 |
Prior years | 24,769 | 18,445 | 1,635 |
Total payments | 46,571 | 30,508 | 33,514 |
Reserve for losses and LAE net of reinsurance recoverables at end of period | 77,520 | 45,419 | 34,470 |
Add: Reinsurance recoverables on unpaid losses and LAE at end of period | 153,895 | 127,947 | 94,566 |
Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at end of period | $ 231,415 | $ 173,366 | $ 129,036 |
Reserve for Losses and Loss A_4
Reserve for Losses and Loss Adjustment Expenses - Total (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Reserve for Losses and Loss Adjustment Expenses | ||||
Total reserve for losses and LAE | $ 77,520 | $ 45,419 | $ 34,470 | $ 3,869 |
Add: Reinsurance recoverables on unpaid losses and LAE at end of period | 153,895 | 127,947 | 94,566 | |
Reserve for losses and LAE gross of reinsurance recoverables on unpaid losses and LAE at end of period | $ 231,415 | $ 173,366 | $ 129,036 |
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, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Adverse (Favorable) Development | |||
Adverse (favorable) prior year development | $ 2,383 | $ (3,585) | $ (64) |
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, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Reserve for Losses and Loss Adjustment Expenses | |||
Loss and loss adjustment expense (deficiency) reserve redundancy | $ (2.4) | $ 3.6 | $ 0.1 |
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, 2022 USD ($) claim | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Dec. 31, 2019 USD ($) | Dec. 31, 2018 USD ($) | Dec. 31, 2017 USD ($) | Dec. 31, 2016 USD ($) | Dec. 31, 2015 USD ($) |
Homeowners' Insurance | ||||||||
Claims Development | ||||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 41,819 | |||||||
Incurred but Not Reported Liabilities | $ 1,153 | |||||||
Cumulative Number of Claims | 18,524 | |||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 39,041 | |||||||
Reserve for losses and loss adjustment expense, net of reinsurance | 2,778 | |||||||
Homeowners' Insurance | 2015 | ||||||||
Claims Development | ||||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 1,612 | $ 1,643 | $ 1,636 | $ 1,642 | $ 1,636 | $ 1,658 | $ 1,785 | $ 2,048 |
Cumulative Number of Claims | 567 | |||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 1,612 | 1,643 | 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 | $ 5,604 | 5,609 | 5,622 | 5,636 | 5,721 | 5,878 | 6,069 | |
Cumulative Number of Claims | 1,357 | |||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 5,604 | 5,609 | 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 | 5,681 | 5,587 | 6,388 | 6,630 | 7,418 | 9,354 | ||
Incurred but Not Reported Liabilities | $ 11 | |||||||
Cumulative Number of Claims | 3,516 | |||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 5,649 | 5,586 | 6,371 | 6,628 | 7,375 | 7,135 | ||
Homeowners' Insurance | 2018 | ||||||||
Claims Development | ||||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 1,529 | 1,929 | 1,930 | 2,008 | 2,193 | |||
Cumulative Number of Claims | 1,017 | |||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 1,529 | 1,922 | 1,922 | 1,853 | 1,550 | |||
Homeowners' Insurance | 2019 | ||||||||
Claims Development | ||||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 676 | 807 | 838 | 914 | ||||
Incurred but Not Reported Liabilities | $ 36 | |||||||
Cumulative Number of Claims | 1,386 | |||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 704 | 685 | 685 | 546 | ||||
Homeowners' Insurance | 2020 | ||||||||
Claims Development | ||||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 13,715 | 15,088 | 19,100 | |||||
Incurred but Not Reported Liabilities | $ 106 | |||||||
Cumulative Number of Claims | 4,451 | |||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 13,161 | 13,095 | 13,588 | |||||
Homeowners' Insurance | 2021 | ||||||||
Claims Development | ||||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 5,765 | 8,453 | ||||||
Cumulative Number of Claims | 4,081 | |||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 5,472 | 4,351 | ||||||
Homeowners' Insurance | 2022 | ||||||||
Claims Development | ||||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 7,237 | |||||||
Incurred but Not Reported Liabilities | $ 1,000 | |||||||
Cumulative Number of Claims | 2,149 | |||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 5,310 | |||||||
Special Property | ||||||||
Claims Development | ||||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 118,122 | |||||||
Incurred but Not Reported Liabilities | $ 13,598 | |||||||
Cumulative Number of Claims | 4,383 | |||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 83,788 | |||||||
Reserve for losses and loss adjustment expense, net of reinsurance | 34,334 | |||||||
Special Property | 2015 | ||||||||
Claims Development | ||||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 692 | 673 | 677 | 678 | 671 | 671 | 719 | 630 |
Cumulative Number of Claims | claim | 6 | |||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 692 | 673 | 673 | 666 | 626 | 586 | 438 | $ 265 |
Special Property | 2016 | ||||||||
Claims Development | ||||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 1,521 | 1,453 | 1,453 | 1,454 | 1,251 | 1,249 | 1,381 | |
Cumulative Number of Claims | claim | 26 | |||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 1,521 | 1,453 | 1,453 | 1,444 | 1,216 | 1,064 | $ 703 | |
Special Property | 2017 | ||||||||
Claims Development | ||||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 4,987 | 4,974 | 4,264 | 4,014 | 3,475 | 3,071 | ||
Cumulative Number of Claims | claim | 110 | |||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 4,987 | 4,974 | 4,269 | 4,011 | 3,344 | $ 1,967 | ||
Special Property | 2018 | ||||||||
Claims Development | ||||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 6,412 | 6,021 | 6,009 | 6,095 | 5,970 | |||
Cumulative Number of Claims | claim | 176 | |||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 6,414 | 6,021 | 6,009 | 6,036 | $ 2,859 | |||
Special Property | 2019 | ||||||||
Claims Development | ||||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 3,617 | 3,140 | 3,385 | 3,661 | ||||
Incurred but Not Reported Liabilities | $ 62 | |||||||
Cumulative Number of Claims | claim | 294 | |||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 3,466 | 3,072 | 2,825 | $ 1,633 | ||||
Special Property | 2020 | ||||||||
Claims Development | ||||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 45,850 | 42,160 | 42,334 | |||||
Incurred but Not Reported Liabilities | $ 2,263 | |||||||
Cumulative Number of Claims | claim | 960 | |||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 42,343 | 36,127 | $ 18,274 | |||||
Special Property | 2021 | ||||||||
Claims Development | ||||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 19,393 | 21,383 | ||||||
Incurred but Not Reported Liabilities | $ 758 | |||||||
Cumulative Number of Claims | claim | 1,386 | |||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 17,028 | $ 7,004 | ||||||
Special Property | 2022 | ||||||||
Claims Development | ||||||||
Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | 35,650 | |||||||
Incurred but Not Reported Liabilities | $ 10,515 | |||||||
Cumulative Number of Claims | 1,425 | |||||||
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance | $ 7,337 |
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, 2022 |
Homeowners' Insurance | |
Short-duration Insurance Contracts, Historical Claims Duration | |
Year 1 | 85.32% |
Year 2 | 16.39% |
Year 3 | 0.81% |
Year 4 | 0.88% |
Year 5, net | (9.53%) |
Year 6 | 0.35% |
Year 7 | 0.17% |
Year 8, net | (1.92%) |
Special Property | |
Short-duration Insurance Contracts, Historical Claims Duration | |
Year 1 | 38.78% |
Year 2 | 35.64% |
Year 3 | 10.79% |
Year 4 | 7.40% |
Year 5 | 6.66% |
Year 6 | 0.42% |
Year 7 | 2.24% |
Year 8 | 2.70% |
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, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019 |
Short-duration Insurance Contracts, Historical Claims Duration | ||||
Reserve for losses and loss adjustment expense net of reinsurance | $ 77,520 | $ 45,419 | $ 34,470 | $ 3,869 |
Reinsurance recoverable on unpaid losses and loss adjustment expenses | 153,895 | 127,947 | 94,566 | |
Reserve for losses and loss adjustment expenses | 231,415 | $ 173,366 | $ 129,036 | |
Homeowners' Insurance | ||||
Short-duration Insurance Contracts, Historical Claims Duration | ||||
Reserve for losses and loss adjustment expense net of reinsurance | 2,778 | |||
Reinsurance recoverable on unpaid losses and loss adjustment expenses | 11,339 | |||
Special Property | ||||
Short-duration Insurance Contracts, Historical Claims Duration | ||||
Reserve for losses and loss adjustment expense net of reinsurance | 34,334 | |||
Reinsurance recoverable on unpaid losses and loss adjustment expenses | 97,231 | |||
Reinsurance- Nonproportional assumed property | ||||
Short-duration Insurance Contracts, Historical Claims Duration | ||||
Reserve for losses and loss adjustment expense net of reinsurance | 8,568 | |||
Other | ||||
Short-duration Insurance Contracts, Historical Claims Duration | ||||
Reserve for losses and loss adjustment expense net of reinsurance | 31,840 | |||
Reinsurance recoverable on unpaid losses and loss adjustment expenses | $ 45,325 |
Reinsurance - General Informati
Reinsurance - General Information (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||
Jun. 30, 2017 USD ($) | Mar. 31, 2021 USD ($) | Dec. 31, 2022 USD ($) Counterparty | Dec. 31, 2021 USD ($) Counterparty | Dec. 31, 2020 USD ($) Counterparty | Jun. 30, 2022 USD ($) | |
Reinsurance Retention Policy | ||||||
Retention amount | $ 10,700 | $ 10,900 | ||||
Number of Company's largest reinsurers | Counterparty | 3 | 3 | 3 | |||
Reinsurance premiums ceded | $ 378,806 | $ 200,172 | $ 146,388 | |||
Percentage of reinsurance premiums ceded on total premium | 23.90% | 20.90% | 22.40% | |||
Percentage of reinsurance recoverable on paid and unpaid losses on total balance | 31.50% | 19.30% | ||||
Ceded unearned premiums | $ 204,084 | $ 58,315 | ||||
Ceded written premiums | 524,575 | 223,443 | $ 155,102 | |||
Catastrophe bond, face value | $ 275,000 | |||||
Catastrophe | ||||||
Reinsurance Retention Policy | ||||||
Retention amount | 12,500 | |||||
Ceded written premiums | 28,300 | 11,700 | 5,000 | |||
Catastrophe bond, issuance costs | $ 400,000 | |||||
Earthquake | ||||||
Reinsurance Retention Policy | ||||||
XOL reinsurance, protection | 2,110,000 | |||||
Hawaii Hurricane | ||||||
Reinsurance Retention Policy | ||||||
XOL reinsurance, protection | 1,010,000 | |||||
U.S. Hurricane | ||||||
Reinsurance Retention Policy | ||||||
XOL reinsurance, protection | 250,000 | |||||
Minimum | Hurricane and earthquake | ||||||
Reinsurance Retention Policy | ||||||
Retention amount | 5,000 | |||||
Maximum | Hurricane and earthquake | ||||||
Reinsurance Retention Policy | ||||||
Retention amount | 15,000 | |||||
Torrey Pines Re Ltd. ("TPRe") | Catastrophe | ||||||
Reinsurance Retention Policy | ||||||
Notes issued for reinsurance coverage | $ 166,000 | |||||
First largest insurer | ||||||
Reinsurance Retention Policy | ||||||
Reinsurance premiums ceded | 24,700 | 24,700 | 9,700 | |||
Reinsurance recoverables on paid and unpaid losses | 60,600 | 21,900 | ||||
Second largest insurer | ||||||
Reinsurance Retention Policy | ||||||
Reinsurance premiums ceded | 22,900 | 11,700 | 8,600 | |||
Reinsurance recoverables on paid and unpaid losses | 53,900 | 10,500 | ||||
Third largest insurer | ||||||
Reinsurance Retention Policy | ||||||
Reinsurance premiums ceded | 18,400 | 10,400 | $ 6,000 | |||
Reinsurance recoverables on paid and unpaid losses | $ 50,600 | $ 9,200 |
Reinsurance - Ceded Written Pre
Reinsurance - Ceded Written Premiums (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Reinsurance Retention [Line Items] | |||
Ceded written premiums | $ 524,575 | $ 223,443 | $ 155,102 |
Ceded Written Premiums [Member] | |||
Reinsurance Retention [Line Items] | |||
Ceded written premiums | 365,193 | 96,001 | 59,276 |
Fronting premium | Ceded Written Premiums [Member] | |||
Reinsurance Retention [Line Items] | |||
Ceded written premiums | 237,285 | 11,001 | |
Inland Marine | Ceded Written Premiums [Member] | |||
Reinsurance Retention [Line Items] | |||
Ceded written premiums | 63,627 | 28,389 | 5,339 |
Specialty Homeowners | Ceded Written Premiums [Member] | |||
Reinsurance Retention [Line Items] | |||
Ceded written premiums | 4,946 | 27,394 | 22,295 |
Commercial Earthquake | Ceded Written Premiums [Member] | |||
Reinsurance Retention [Line Items] | |||
Ceded written premiums | 20,467 | 14,447 | 6,929 |
Commercial All Risk | Ceded Written Premiums [Member] | |||
Reinsurance Retention [Line Items] | |||
Ceded written premiums | 6,260 | 3,948 | 19,218 |
Others | Ceded Written Premiums [Member] | |||
Reinsurance Retention [Line Items] | |||
Ceded written premiums | $ 32,609 | $ 10,822 | $ 5,495 |
Reinsurance - Effect of Reinsur
Reinsurance - Effect of Reinsurance (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Premiums Written: | |||
Direct | $ 816,387 | $ 467,424 | $ 324,253 |
Assumed | 65,481 | 67,751 | 30,107 |
Ceded | (524,575) | (223,443) | (155,102) |
Net written premiums | 357,293 | 311,732 | 199,258 |
Premiums Earned: | |||
Direct | 628,973 | 384,463 | 271,887 |
Assumed | 66,299 | 49,535 | 29,569 |
Ceded | (378,806) | (200,172) | (146,388) |
Net earned premiums | 316,466 | 233,826 | 155,068 |
Losses Incurred: | |||
Direct | 133,517 | 168,292 | 145,774 |
Assumed | 23,574 | 17,184 | 3,485 |
Ceded | (91,261) | (148,106) | (91,969) |
Net losses incurred | 65,829 | 37,370 | 57,290 |
LAE Incurred: | |||
Direct | 38,004 | 13,295 | 18,777 |
Assumed | 5,998 | 1,926 | 159 |
Ceded | (31,159) | (11,134) | (12,111) |
Total LAE incurred | 12,843 | 4,087 | 6,825 |
Total losses and LAE incurred: | |||
Direct | 171,521 | 181,587 | 164,551 |
Assumed | 29,572 | 19,110 | 3,644 |
Ceded | (122,421) | (159,240) | (104,080) |
Net total | $ 78,672 | $ 41,457 | $ 64,115 |
Credit Agreements - Floating Ra
Credit Agreements - Floating Rate Notes (Details) - Revolving credit facility - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Long-term debt | ||
Maximum credit facility borrowing amount | $ 100 | |
Interest rate spread (as a percent) | 2% | |
Commitment fees | $ 0.3 | |
Percentage of unused line fee payable on unborrowed amount | 0.25% | |
Line of credit facility outstanding | $ 0 | $ 0 |
Interest expense | $ 0.4 | |
Secured Overnight Financing Rate | ||
Long-term debt | ||
Interest rate spread (as a percent) | 1.75% | |
Alternate Base Rate | ||
Long-term debt | ||
Interest rate spread (as a percent) | 0.75% |
Credit Agreements - FHLB Line o
Credit Agreements - FHLB Line of Credit (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Line of Credit Facility [Line Items] | ||
Federal home loan bank, advances, branch of FHLB bank, interest rate | 4.65% | |
Interest expense on the FHLB Line of Credit | $ 0.5 | |
Federal home loan bank, advances, branch of FHLB bank, amount of advances | $ 36.4 | $ 0 |
PSIC | ||
Line of Credit Facility [Line Items] | ||
Percentage of borrowing capacity | 10% |
Stockholders' Equity - Shares I
Stockholders' Equity - Shares Issued and Outstanding (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
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) | 25,027,467 | 25,428,929 |
Common stock, shares outstanding (in shares) | 25,027,467 | 25,428,929 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Additional paid-in capital | ||
Additional paid-in capital | $ 333,558 | $ 318,902 |
Stockholders' Equity - Reserved
Stockholders' Equity - Reserved for Future Issuance (Details) - shares | Dec. 31, 2022 | Dec. 31, 2021 | Apr. 16, 2019 |
Common stock reserved for future issuance | |||
Stock options outstanding (in shares) | 882,892 | 933,051 | |
Total (in shares) | 5,040,383 | ||
2019 Equity Incentive Plan | |||
Common stock reserved for future issuance | |||
Stock options outstanding (in shares) | 882,892 | ||
Shares authorized for future issuance (in shares) | 2,594,587 | 2,400,000 | |
2019 Employee Stock Purchase Plan | |||
Common stock reserved for future issuance | |||
Shares authorized for future issuance (in shares) | 907,850 | ||
Restricted Stock Units | |||
Common stock reserved for future issuance | |||
Stock units outstanding (in shares) | 271,951 | 235,696 | |
Restricted Stock Units | 2019 Equity Incentive Plan | |||
Common stock reserved for future issuance | |||
Stock units outstanding (in shares) | 271,951 | ||
Performance Stock Units | |||
Common stock reserved for future issuance | |||
Stock units outstanding (in shares) | 383,103 | 358,401 | |
Performance Stock Units | 2019 Equity Incentive Plan | |||
Common stock reserved for future issuance | |||
Stock units outstanding (in shares) | 383,103 |
Stockholders' Equity - Stock-ba
Stockholders' Equity - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stockholders' Equity | |||
Stock-based compensation expense | $ 11,624 | $ 5,584 | $ 2,167 |
Stockholders' Equity - 2019 Equ
Stockholders' Equity - 2019 Equity Incentive Plan (Details) - 2019 Equity Incentive Plan - shares | Dec. 31, 2022 | Apr. 16, 2019 |
Stock-Based Compensation | ||
Shares authorized (in shares) | 2,594,587 | 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% |
Stockholders' Equity - Stock Op
Stockholders' Equity - Stock Options - Vesting (Details) | 12 Months Ended |
Dec. 31, 2022 | |
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% |
Stock Options | Share-based Payment Arrangement, Tranche One, First Anniversary | Maximum | |
Stock-Based Compensation | |
Vesting percentage (as a percent) | 50% |
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% |
Stock Options | Share-based Payment Arrangement, Tranche Two, First Anniversary | Maximum | |
Stock-Based Compensation | |
Vesting percentage (as a percent) | 50% |
Restricted Stock Units | |
Stock-Based Compensation | |
Vesting period | 5 years |
Restricted Stock Units | Share-based Payment Arrangement, Tranche One | |
Stock-Based Compensation | |
Vesting period | 1 year |
Vesting percentage (as a percent) | 100% |
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 _2
Stockholders' Equity - Stock Options - Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Number of shares | ||
Outstanding at beginning of period (in shares) | 933,051 | |
Granted (in shares) | 122,539 | |
Exercised (in shares) | (148,427) | |
Canceled (in shares) | (24,271) | |
Outstanding at end of period (in shares) | 882,892 | 933,051 |
Weighted-average exercise price | ||
Outstanding at beginning of period (in dollars per share) | $ 29.41 | |
Granted (in dollars per share) | 51.99 | |
Exercised (in dollars per share) | 15.31 | |
Canceled (in dollars per share) | 68.13 | |
Outstanding at end of period (in dollars per share) | $ 33.85 | $ 29.41 |
Additional disclosures | ||
Weighted average remaining contractual term | 6 years 11 months 1 day | 7 years 7 months 2 days |
Aggregate intrinsic value | $ 16,990 | $ 36,679 |
Vested and Exercisable | ||
Vested and exercisable, number (in shares) | 658,858 | |
Vested and exercisable, weighted average exercise price (in dollars per share) | $ 26.33 | |
Vested and exercisable, weighted average remaining contractual term | 6 years 5 months 23 days | |
Vested and exercisable, aggregate intrinsic value | $ 16,001 |
Stockholders' Equity - Stock _3
Stockholders' Equity - Stock Options - Fair Value Assumptions (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Fair value assumptions | |||
Dividend yield (as a percent) | 0% | ||
Stock Options | |||
Fair value assumptions | |||
Risk free rate of return, minimum (as a percent) | 1.69% | 0.57% | 0.32% |
Risk free rate of return, maximum (as a percent) | 4.23% | 1.35% | 1.52% |
Expected share price volatility, minimum (as a percent) | 39.73% | 26.06% | 18.13% |
Expected share price volatility, maximum (as a percent) | 43.03% | 39.41% | 25.67% |
Expected life in years | 5 years 10 months 20 days | 5 years 10 months 20 days | |
Dividend yield (as a percent) | 0% | 0% | |
Stock Options | Minimum | |||
Fair value assumptions | |||
Expected life in years | 5 years 7 months 17 days | ||
Stock Options | Maximum | |||
Fair value assumptions | |||
Expected life in years | 6 years 29 days |
Stockholders' Equity - Restrict
Stockholders' Equity - Restricted Stock Units (Details) - Restricted Stock Units | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Number of shares | |
Outstanding at beginning of period (in shares) | shares | 235,696 |
Granted (in shares) | shares | 100,106 |
Vested (in shares) | shares | (57,536) |
Forfeited (in shares) | shares | (6,315) |
Non vested at end of period (in shares) | shares | 271,951 |
Weighted-average grant date fair value | |
Outstanding at beginning of period (in dollars per share) | $ / shares | $ 79.33 |
Granted (in dollars per share) | $ / shares | 51.53 |
Vested (in dollars per share) | $ / shares | 80.60 |
Forfeited (in dollars per share) | $ / shares | 76.30 |
Non vested outstanding at end of period (in dollars per share) | $ / shares | $ 68.90 |
Stockholders' Equity - Performa
Stockholders' Equity - Performance Stock Units (Details) - Performance Stock Units | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Number of shares | |
Outstanding at beginning of period (in shares) | shares | 358,401 |
Granted (in shares) | shares | 26,165 |
Forfeited (in shares) | shares | (1,463) |
Non vested at end of period (in shares) | shares | 383,103 |
Weighted-average grant date fair value | |
Outstanding at beginning of period (in dollars per share) | $ / shares | $ 36.87 |
Granted (in dollars per share) | $ / shares | 50.36 |
Forfeited (in dollars per share) | $ / shares | 80.69 |
Non vested outstanding at end of period (in dollars per share) | $ / shares | $ 37.62 |
Stockholders' Equity - Unrecogn
Stockholders' Equity - Unrecognized Compensation Expense (Details) $ in Thousands | 12 Months Ended | ||
Jul. 15, 2021 | Dec. 31, 2022 USD ($) D shares | Dec. 31, 2021 USD ($) | |
Unrecognized stock-based compensation expense | |||
Total intrinsic value of stock options exercised | $ 7,100 | $ 8,500 | |
Total unrecognized stock-based compensation expense, options | $ 3,600 | ||
Weighted-average period over which unrecognized stock-based compensation expense is expected to be recognized | 5 years | ||
Stock Options | |||
Unrecognized stock-based compensation expense | |||
Weighted-average period over which unrecognized stock-based compensation expense is expected to be recognized | 1 year 6 months 29 days | ||
Restricted Stock Units | |||
Unrecognized stock-based compensation expense | |||
Total unrecognized stock-based compensation expense, options | $ 14,600 | ||
Total unrecognized stock-based compensation expense, restricted stock units and performance stock units | $ 15,400 | ||
Granted (in shares) | shares | 100,106 | ||
Weighted-average period over which unrecognized stock-based compensation expense is expected to be recognized | 2 years 10 months 13 days | ||
Restricted Stock Units | CEO | |||
Unrecognized stock-based compensation expense | |||
Granted (in shares) | shares | 350,000 | ||
Performance Stock Units | |||
Unrecognized stock-based compensation expense | |||
Total unrecognized stock-based compensation expense, options | $ 10,500 | ||
Total unrecognized stock-based compensation expense, restricted stock units and performance stock units | $ 12,400 | ||
Granted (in shares) | shares | 26,165 | ||
Weighted-average period over which unrecognized stock-based compensation expense is expected to be recognized | 3 years 6 months 14 days | ||
Number of days, achievement of milestone stock price | D | 30 | ||
Stock price milestones | 0 | ||
Percentage of predetermined performance achievement | 100% | ||
Award service period | 3 years | ||
Performance Stock Units | CEO | |||
Unrecognized stock-based compensation expense | |||
Granted (in shares) | shares | 192,307 |
Stockholders' Equity - 2019 Emp
Stockholders' Equity - 2019 Employee Stock Purchase Plan (Details) - shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Apr. 16, 2019 | |
Stock-Based Compensation | |||
Issuance of common stock via employee stock purchase plan (in shares) | 13,990 | 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 | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Stockholders' Equity | ||
Amount of authorizes repurchase | $ 100 | $ 40 |
Amount of repurchase of shares | $ 34.4 | $ 15.9 |
Repurchase of shares (in shares) | 621,415 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Changes in accumulated other comprehensive income | |||
Beginning balance | $ 394,169 | $ 363,713 | $ 218,556 |
Other comprehensive income (loss) | (41,827) | (7,934) | 8,560 |
Ending balance | 384,754 | 394,169 | 363,713 |
Accumulated Other Comprehensive Income (Loss) | |||
Changes in accumulated other comprehensive income | |||
Beginning balance | 5,312 | 13,246 | 4,686 |
Other comprehensive income (loss) before reclassification | (55,270) | (9,579) | 11,292 |
Federal income tax (expense) benefit | 11,607 | 2,012 | (2,371) |
Other comprehensive income (loss) before reclassification, net of tax | (43,663) | (7,567) | 8,921 |
Amounts reclassified from AOCI | 2,325 | (464) | (456) |
Federal income tax expense (benefit) | (489) | 97 | 95 |
Amounts reclassified from AOCI, net of tax | 1,836 | (367) | (361) |
Other comprehensive income (loss) | (41,827) | (7,934) | 8,560 |
Ending balance | $ (36,515) | $ 5,312 | $ 13,246 |
Underwriting Information - Repo
Underwriting Information - Reportable Segments (Details) | 12 Months Ended |
Dec. 31, 2022 segment | |
Reportable segment | |
Number of reportable segments | 1 |
Underwriting Information - Gros
Underwriting Information - Gross Written Premiums by Product (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Gross written premiums | |||
Amount | $ 881,868 | $ 535,175 | $ 354,360 |
% of GWP | 100% | 100% | 100% |
Fronting premium | |||
Gross written premiums | |||
Amount | $ 223,249 | $ 11,459 | |
% of GWP | 25.30% | 2.20% | |
Residential Earthquake | |||
Gross written premiums | |||
Amount | $ 213,803 | $ 171,048 | $ 140,934 |
% of GWP | 24.20% | 32% | 39.80% |
Commercial Earthquake | |||
Gross written premiums | |||
Amount | $ 131,677 | $ 90,552 | $ 58,890 |
% of GWP | 14.90% | 16.90% | 16.60% |
Inland Marine | |||
Gross written premiums | |||
Amount | $ 105,068 | $ 57,124 | $ 15,423 |
% of GWP | 11.90% | 10.70% | 4.30% |
Commercial All Risk | |||
Gross written premiums | |||
Amount | $ 51,671 | $ 38,640 | $ 53,933 |
% of GWP | 5.90% | 7.20% | 15.20% |
Casualty | |||
Gross written premiums | |||
Amount | $ 35,791 | $ 9,584 | |
% of GWP | 4.10% | 1.90% | |
Hawaii Hurricane | |||
Gross written premiums | |||
Amount | $ 32,967 | $ 30,298 | $ 13,824 |
% of GWP | 3.70% | 5.60% | 3.90% |
Specialty Homeowners | |||
Gross written premiums | |||
Amount | $ 29,959 | $ 67,894 | $ 49,849 |
% of GWP | 3.40% | 12.70% | 14.10% |
Residential Flood | |||
Gross written premiums | |||
Amount | $ 14,539 | $ 11,652 | $ 8,176 |
% of GWP | 1.70% | 2.20% | 2.30% |
Others | |||
Gross written premiums | |||
Amount | $ 43,144 | $ 46,924 | $ 13,331 |
% of GWP | 4.90% | 8.60% | 3.80% |
Underwriting Information - Gr_2
Underwriting Information - Gross Written Premiums by State (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Gross written premiums | |||
Amount | $ 881,868 | $ 535,175 | $ 354,360 |
% of GWP | 100% | 100% | 100% |
California | |||
Gross written premiums | |||
Amount | $ 418,809 | $ 244,416 | $ 172,765 |
% of GWP | 47.50% | 45.60% | 48.80% |
Texas | |||
Gross written premiums | |||
Amount | $ 90,459 | $ 62,893 | $ 67,974 |
% of GWP | 10.30% | 11.80% | 19.20% |
Washington | |||
Gross written premiums | |||
Amount | $ 41,827 | $ 23,608 | $ 14,328 |
% of GWP | 4.70% | 4.40% | 4% |
Hawaii | |||
Gross written premiums | |||
Amount | $ 40,157 | $ 34,993 | $ 16,398 |
% of GWP | 4.50% | 6.50% | 4.60% |
Florida | |||
Gross written premiums | |||
Amount | $ 38,715 | $ 27,386 | $ 5,795 |
% of GWP | 4.40% | 5.10% | 1.70% |
Oregon | |||
Gross written premiums | |||
Amount | $ 24,108 | $ 13,677 | $ 10,038 |
% of GWP | 2.70% | 2.60% | 2.80% |
Illinois | |||
Gross written premiums | |||
Amount | $ 17,368 | $ 12,133 | $ 6,133 |
% of GWP | 2% | 2.30% | 1.70% |
Other | |||
Gross written premiums | |||
Amount | $ 197,649 | $ 100,798 | $ 49,786 |
% of GWP | 22.40% | 18.80% | 14.10% |
North Carolina | |||
Gross written premiums | |||
Amount | $ 12,776 | $ 15,271 | $ 11,143 |
% of GWP | 1.50% | 2.90% | 3.10% |
Underwriting Information - Gr_3
Underwriting Information - Gross Written Premiums by Insurance Subsidiary (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Gross written premiums | |||
Amount | $ 881,868 | $ 535,175 | $ 354,360 |
% of GWP | 100% | 100% | 100% |
Subsidiaries | |||
Gross written premiums | |||
Amount | $ 881,868 | $ 535,175 | $ 354,360 |
% of GWP | 100% | 100% | 100% |
PSIC | |||
Gross written premiums | |||
Amount | $ 489,720 | $ 383,064 | $ 324,870 |
% of GWP | 55.50% | 71.60% | 91.70% |
PESIC | |||
Gross written premiums | |||
Amount | $ 392,148 | $ 152,111 | $ 29,490 |
% of GWP | 44.50% | 28.40% | 8.30% |
Underwriting Information - Addi
Underwriting Information - Additional Information (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 USD ($) item | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Underwriting Information | |||
Gross written premiums | $ 881,868 | $ 535,175 | $ 354,360 |
% of GWP | 100% | 100% | 100% |
Number of program administrators | item | 2 | ||
Sales Revenue | Product Concentration Risk | |||
Underwriting Information | |||
Gross written premiums | $ 417,500 | $ 255,800 | $ 191,300 |
% of GWP | 47.30% | 48.20% | 54% |
Retirement and Post-Employmen_2
Retirement and Post-Employment Retirement Plans (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Retirement and Post-Employment Retirement Plans | |||
Employer matching participants gross wages (as a percent) | 3% | ||
Contributions to plan | $ 0.7 | $ 0.7 | $ 0.3 |
Income Taxes - Federal Income T
Income Taxes - Federal Income Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Taxes | |||
Current | $ 18,842 | $ 10,650 | $ (1,128) |
Deferred | (3,461) | 641 | 1,094 |
Income tax expense (benefit) | $ 15,381 | $ 11,291 | $ (34) |
Income Taxes - Deferred Tax Ass
Income Taxes - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets: | ||
Losses and LAE reserve discount | $ 680 | $ 279 |
State tax net operating losses | 3,070 | 2,879 |
Deferred Intercompany | 656 | |
Unearned premiums | 11,258 | 9,569 |
Capitalized organizational costs | 184 | 214 |
Unrealized losses on investments | 9,891 | |
Deferred compensation | 1,585 | 997 |
Other | 1,544 | 1,285 |
Total deferred tax assets | 28,868 | 15,223 |
Deferred tax liabilities: | ||
Deferred acquisition costs | (11,922) | (11,754) |
Unrealized gains on investments | (1,612) | |
Internally developed software | (1,520) | (1,969) |
Other | (1,734) | (919) |
Total deferred tax liabilities | (15,176) | (16,254) |
Net deferred tax liability before valuation allowance | 13,692 | (1,031) |
Valuation allowance | (3,070) | (2,879) |
Total net deferred tax assets (liabilities) | $ 10,622 | |
Total net deferred tax assets (liabilities) | $ (3,910) |
Income Taxes - Net Operating Lo
Income Taxes - Net Operating Loss Carryforwards (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Domestic Tax Authority | |
Operating Loss Carryforwards [Line Items] | |
Operating Loss Carryforwards | $ 0 |
Income Taxes - Tax Credit Carry
Income Taxes - Tax Credit Carryforwards (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Domestic Tax Authority | |
Tax Credit Carryforward [Line Items] | |
Tax Credit Carryforward, Amount | $ 0 |
Income Taxes - Effective Tax Ra
Income Taxes - Effective Tax Rate - Tabular Disclosure (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Effective Income Tax Rate Reconciliation, Amount | |||
Expense computed at federal tax rate | $ 14,186 | $ 11,999 | $ 1,321 |
Stock-based compensation | 153 | (1,067) | (1,538) |
Dividend received deduction and tax-exempt interest | (101) | (81) | (67) |
Valuation allowance | 191 | 2,199 | 606 |
Other | 952 | (1,759) | (356) |
Income tax expense (benefit) | $ 15,381 | $ 11,291 | $ (34) |
Effective Income Tax Rate Reconciliation, Percent | |||
Expense computed at federal tax rate | 21% | 21% | 21% |
Stock-based compensation | 0.23% | (1.87%) | (24.44%) |
Dividend received deduction and tax-exempt interest | (0.15%) | (0.14%) | (1.06%) |
Valuation allowance | 0.28% | 3.85% | 9.63% |
Other | 1.41% | (3.08%) | (5.67%) |
Income tax expense (benefit) | 22.77% | 19.76% | (0.54%) |
Income Taxes - Uncertain Tax Po
Income Taxes - Uncertain Tax Positions (Details) - USD ($) | Dec. 31, 2022 | Dec. 31, 2021 |
Income Taxes | ||
Unrecognized Tax Benefits | $ 0 | $ 0 |
Income Taxes - Tax Returns Subj
Income Taxes - Tax Returns Subject to Examination (Details) | 12 Months Ended |
Dec. 31, 2022 | |
Earliest Tax Year | |
Income Taxes | |
Open Tax Year | 2019 |
Latest Tax Year | |
Income Taxes | |
Open Tax Year | 2021 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Earnings Per Share | |||
Net income | $ 52,170 | $ 45,847 | $ 6,257 |
Net income - Basic | $ 52,170 | $ 45,847 | $ 6,257 |
Weighted average common shares outstanding: | |||
Basic (in shares) | 25,243,397 | 25,459,514 | 24,872,251 |
Common Share equivalents (in shares) | 552,611 | 652,390 | 726,396 |
Diluted (in shares) | 25,796,008 | 26,111,904 | 25,598,647 |
Earnings per share: | |||
Basic (in dollars per share) | $ 2.07 | $ 1.80 | $ 0.25 |
Diluted (in dollars per share) | $ 2.02 | $ 1.76 | $ 0.24 |
Statutory financial informati_3
Statutory financial information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||
Dec. 31, 2021 | Sep. 30, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Statutory Accounting Practices | |||||
Statutory net income (loss) | $ 76,222 | $ 51,410 | $ 1,753 | ||
Statutory capital and surplus | $ 271,977 | 314,508 | 271,977 | 213,721 | |
Shareholder's equity | 394,169 | 384,754 | 394,169 | ||
Dividends received from subsidiary | 10,000 | $ 15,000 | 0 | ||
BERMUDA | |||||
Statutory Accounting Practices | |||||
Statutory net income (loss) | 200 | 1,400 | $ 900 | ||
Statutory capital and surplus | 15,700 | 15,600 | 15,700 | ||
Minimum statutory solvency margin | 1,200 | 1,200 | 1,200 | ||
Shareholder's equity | $ 17,000 | $ 15,500 | $ 17,000 | ||
BERMUDA | Minimum | |||||
Statutory Accounting Practices | |||||
Liquidity ratio | 75% |
Dividend Restrictions (Details)
Dividend Restrictions (Details) $ in Millions | Dec. 31, 2022 USD ($) |
Dividend Restrictions | |
Threshold dividend or distribution without the prior approval, California and Oregon Insurance Commissioners | $ 78.2 |
Palomar Specialty Reinsurance Company Bermuda Ltd | |
Dividend Restrictions | |
Dividends receivable | $ 3.9 |
Commitments and Contingencies -
Commitments and Contingencies - Letters of Credit (Details) - Standby Letters of Credit $ in Millions | Dec. 31, 2022 USD ($) LetterOfCredit |
Letters of Credit | |
Letters of credit, number | LetterOfCredit | 6 |
Letters of credit, amount | $ | $ 5.7 |
Commitments and Contingencies_2
Commitments and Contingencies - Trust Account (Details) $ in Millions | Dec. 31, 2022 USD ($) |
Commitments and Contingencies | |
Trust, par value | $ 37.2 |
Schedule II - Balance Sheets (D
Schedule II - Balance Sheets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Investments: | ||
Fixed maturity securities available for sale, at fair value (amortized cost: $561,580 in 2022; $426,122 in 2021) | $ 515,064 | $ 432,682 |
Equity securities, at fair value: (cost: $1,724 in 2021, $1,661 in 2020) | 38,576 | 33,261 |
Total investments | 553,640 | 465,943 |
Cash and cash equivalents | 68,108 | 50,284 |
Accrued investment income | 3,777 | 2,725 |
Prepaid expenses and other assets | 44,088 | 37,072 |
Total assets | 1,306,450 | 925,734 |
Liabilities: | ||
Accounts payable and other liabilities | 25,760 | 21,284 |
Deferred tax liabilities | 3,908 | |
Total liabilities | 921,696 | 531,565 |
Shareholder's equity | ||
Preferred stock, $0.0001 par value, 5,000,000 shares authorized as of December 31, 2022 and December 31, 2021, 0 shares issued and outstanding as of December 31, 2022 and December 31, 2021 | ||
Common stock, $0.0001 par value, 500,000,000 shares authorized, 25,027,467 and 25,428,929 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively | 3 | 3 |
Additional paid-in capital | 333,558 | 318,902 |
Accumulated other comprehensive income | (36,515) | 5,312 |
Retained earnings | 87,708 | 69,952 |
Total stockholders' equity | 384,754 | 394,169 |
Total liabilities and stockholders' equity | 1,306,450 | 925,734 |
Parent Company | ||
Investments: | ||
Fixed maturity securities available for sale, at fair value (amortized cost: $561,580 in 2022; $426,122 in 2021) | 45,511 | 49,221 |
Equity securities, at fair value: (cost: $1,724 in 2021, $1,661 in 2020) | 1,626 | 1,839 |
Total investments | 47,136 | 51,060 |
Cash and cash equivalents | 781 | 4,437 |
Accrued investment income | 320 | 313 |
Prepaid expenses and other assets | 2,267 | 966 |
Receivables from subsidiaries | 3,689 | 2,322 |
Investment in subsidiaries | 405,524 | 365,018 |
Total assets | 459,718 | 424,116 |
Liabilities: | ||
Accounts payable and other liabilities | 7,359 | 4,672 |
Payables to subsidiaries | 57,324 | 11,102 |
Federal income tax payable | 10,282 | 10,265 |
Deferred tax liabilities | 3,908 | |
Total liabilities | 74,965 | 29,947 |
Shareholder's equity | ||
Common stock, $0.0001 par value, 500,000,000 shares authorized, 25,027,467 and 25,428,929 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively | 3 | 3 |
Additional paid-in capital | 333,557 | 318,902 |
Accumulated other comprehensive income | (36,514) | 5,312 |
Retained earnings | 87,708 | 69,952 |
Total stockholders' equity | 384,753 | 394,169 |
Total liabilities and stockholders' equity | $ 459,718 | $ 424,116 |
Schedule II - Balance Sheets -
Schedule II - Balance Sheets - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Fixed maturity securities available for sale, amortized cost | $ 561,580 | $ 426,122 |
Equity securities, cost | $ 42,352 | $ 31,834 |
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) | 25,027,467 | 25,428,929 |
Common stock, shares outstanding (in shares) | 25,027,467 | 25,428,929 |
Parent Company | ||
Fixed maturity securities available for sale, amortized cost | $ 51,993 | $ 50,916 |
Equity securities, cost | $ 1,725 | $ 1,725 |
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) | 25,027,467 | 25,428,929 |
Common stock, shares outstanding (in shares) | 25,027,467 | 25,428,929 |
Schedule II - Statements of Inc
Schedule II - Statements of Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Net investment income | $ 13,877 | $ 9,080 | $ 8,612 |
Net realized and unrealized (losses) gains on investments | (7,529) | 1,277 | 1,488 |
Total revenues | 327,086 | 247,791 | 168,463 |
Other operating expenses | 259,535 | 190,653 | 162,240 |
Income before income taxes | 67,551 | 57,138 | 6,223 |
Income tax expense (benefit) | 15,381 | 11,291 | (34) |
Net income | 52,170 | 45,847 | 6,257 |
Other comprehensive income: | |||
Net unrealized (losses) gains on securities available for sale | (41,827) | (7,934) | 8,560 |
Total comprehensive income | 10,343 | 37,913 | 14,817 |
Parent Company | |||
Net investment income | 1,048 | 555 | 939 |
Net realized and unrealized (losses) gains on investments | (320) | 217 | 63 |
Total revenues | 728 | 772 | 1,002 |
Other operating expenses | 33,292 | 19,480 | 8,696 |
Income before income taxes | (32,564) | (18,708) | (7,694) |
Income tax expense (benefit) | (8,464) | 11,039 | (34) |
Loss before equity in net income of subsidiaries | (24,100) | (29,747) | (7,660) |
Equity in net income of subsidiaries | 76,270 | 75,594 | 13,917 |
Net income | 52,170 | 45,847 | 6,257 |
Other comprehensive income: | |||
Net unrealized (losses) gains on securities available for sale | (3,997) | 580 | 1,075 |
Equity in other comprehensive income (loss) of subsidiaries, net of taxes | (37,830) | (8,514) | 7,485 |
Total comprehensive income | $ 10,343 | $ 37,913 | $ 14,817 |
Schedule II - Statements of Cas
Schedule II - Statements of Cash Flows (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Operating activities | |||
Net income | $ 52,170 | $ 45,847 | $ 6,257 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Stock-based compensation expense | 11,624 | 5,584 | 2,167 |
Net realized and unrealized losses on investments | 7,529 | (1,277) | (1,488) |
Amortization of premium on fixed maturity securities | 1,607 | 2,317 | 1,214 |
Deferred income tax expense | (3,461) | 641 | 1,094 |
Net cash provided by (used in) operating activities | 169,583 | 87,814 | 57,493 |
Investing activities | |||
Purchases of fixed maturity securities | (382,114) | (166,894) | (295,002) |
Sales and maturities of fixed maturity securities | 242,726 | 120,198 | 124,243 |
Net cash used in investing activities | (156,807) | (58,188) | (185,385) |
Financing activities | |||
Proceeds from common stock issued via equity incentive plans | 760 | 719 | 741 |
Repurchase of common stock | (34,415) | (15,852) | |
Net cash provided by (used in) financing activities | 5,017 | (13,041) | 128,329 |
Net increase in cash, cash equivalents and restricted cash | 17,793 | 16,585 | 437 |
Cash, cash equivalents and restricted cash at beginning of period | 50,371 | 33,786 | 33,349 |
Cash, cash equivalents and restricted cash at end of period | 68,164 | 50,371 | 33,786 |
Supplementary cash flow information: | |||
Cash paid for income taxes | 18,890 | 2,104 | 7,182 |
Cash paid for interest | 704 | ||
Parent Company | |||
Operating activities | |||
Net income | 52,170 | 45,847 | 6,257 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Equity in undistributed earnings of subsidiaries | (76,270) | (75,594) | (13,917) |
Stock-based compensation expense | 8,820 | 4,755 | |
Net realized and unrealized losses on investments | 320 | (217) | (63) |
Amortization of premium on fixed maturity securities | 347 | 443 | 350 |
Deferred income tax expense | 7,210 | 634 | 1,094 |
Changes in operating assets and liabilities: | 36,449 | 13,596 | 7,772 |
Net cash provided by (used in) operating activities | 29,046 | (10,536) | 1,493 |
Investing activities | |||
Purchases of fixed maturity securities | (9,807) | (2,177) | (71,048) |
Sales and maturities of fixed maturity securities | 8,488 | 11,396 | 6,651 |
Cash paid to subsidiaries | (15,595) | (59,789) | |
Cash received from subsidiaries | 27,100 | ||
Net cash used in investing activities | (1,319) | 20,724 | (124,186) |
Financing activities | |||
Proceeds from common stock issued via equity incentive plans | 3,032 | 2,811 | 2,782 |
Repurchase of common stock | (34,415) | (15,852) | |
Net cash provided by (used in) financing activities | (31,383) | (13,041) | 128,329 |
Net increase in cash, cash equivalents and restricted cash | (3,656) | (2,853) | 5,636 |
Cash, cash equivalents and restricted cash at beginning of period | 4,437 | 7,290 | 1,654 |
Cash, cash equivalents and restricted cash at end of period | 781 | 4,437 | 7,290 |
Supplementary cash flow information: | |||
Cash paid for income taxes | 18,890 | $ 2,104 | 7,182 |
Cash paid for interest | $ 704 | ||
Stock Issued in January | |||
Financing activities | |||
Proceeds from stock offerings, net of offering costs | 35,464 | ||
Stock Issued in January | Parent Company | |||
Financing activities | |||
Proceeds from stock offerings, net of offering costs | 35,464 | ||
Stock Issued in June | |||
Financing activities | |||
Proceeds from stock offerings, net of offering costs | 90,083 | ||
Stock Issued in June | Parent Company | |||
Financing activities | |||
Proceeds from stock offerings, 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, 2022 | Dec. 31, 2021 | |
Valuation Allowance for deferred tax assets | ||
Valuation and Qualifying Accounts | ||
Balance at Beginning of Period | $ 2,879 | $ 680 |
Amounts Charged to Expense | 191 | 2,199 |
Balance at End of Period | 3,070 | 2,879 |
Valuation Allowance for premium receivable | ||
Valuation and Qualifying Accounts | ||
Balance at Beginning of Period | 315 | 203 |
Amounts Charged to Expense | 188 | 285 |
Amounts Written Off | 407 | 173 |
Balance at End of Period | $ 96 | $ 315 |