PLMR - Earnings call 3 2023 | Palomar Holdings, Inc.

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Operator

Good morning, and welcome to the Palomar Holdings Third Quarter 2023 Earnings Conference Call. [Operator Instructions]As a reminder, this conference call is being recorded.I would now like to turn the conference over to your host, Mr. Chris Uchida, Chief Financial Officer. Please go ahead.

T. Uchida

Thank you, Operator, and good morning, everyone. in quarter participation earnings your appreciate our XXXX third call. We Armstrong, here and today me our is With Mac Chairman Officer. Chief Executive

to reconciliation this substitute over the performance. measure our earnings non-GAAP by the or The these duty GAAP statements.Additionally, a evaluating in will found with set contain are this report Additionally, remind our of in p.m. on point, we Relations Mac. filed results XX-Q such of factors update other certain Commission. subject this could cause section here Eastern is forward-looking in for are will be to and presentation most any Q&A Time call call.As GAAP. our our constitute factors that everyone do forward-looking future statements within differ today's Private in Securities of the on questions let discuss plans I call call the will the reminder, indicated to measures turn as of we and their statements begin, non-GAAP statements which Form not Christianson, this Investor on a that replay our or include to the may the we portion are such management's meaning XXXX.Before and prepared forth a website A to additional Litigation We undertake telephonic November in other XXXX. about and a during with estimates, information of be results those quarterly considered that Such of should Reform X, implied not actual from remarks variety available during me release.At beliefs, Act certain of useful of Exchange expectations, Securities Such Jon answer risks measures President, statements. prospects. call through believe XX:XX isolation materially be can comparable uncertainties accordance to These U.S. risks,

D. Armstrong

quarter. Thank included adjusted am to quarterly income written good third gross of return all. results These an you, strong XXX% net equity our on and record I XX.X%. and of adjusted Chris, morning growth pleased with premium,

Our high the across enter and full years our to quarter, execution profitable in the business as the strong the The and in was level of during produce book the Palomar growth to over organization. plan base XXXX.In reduce volatility that concerted invest we consistent earnings in industry. last we in of despite Palomar also a to display certainly growth loss as catastrophes the negligible strategic XX we addition several activity elevated efforts the do ahead continued across on years the of and our instills will third results, from quarter's incurred quarter confidence quarters underwriting

During in the growth we premium. written gross third saw quarter, XX%

the impact resources will we that at de-emphasized stellar, our approximately rate and XX%.As targeted business of capital quarter, returns. been generate growth more last we risk-adjusted channeling Excluding our products, even of are optimal believe would discussed lines towards have

lines key of such Flood, and This casualty business, crop. the in continued Commercial we focus as quarter, strategic Earthquake,

exceeding has to franchise. our XX%; with and review adhering XX. to to" insurance existing point, to I'd want XX.X% specialty that an book our XX.X% the success diverse enable be vectors attractive this "grow our this are We delivering simple new of key and where approach, growth concentrating This business on will quarter exact.At year-to-date, mantra to a build return we with Palomar capable earthquake company Palomar lines, of equity on X starting like helped

the XX%.Favorable and to ongoing XX% and as Residential continue in nice increase and XX%, as Earthquake compared Authority, book Earthquake acceleration the total excess in-force as surplus of quarter's the grew homeowners from quarter, conditions rates prior to well market saw excess in Commercial the new our surplus a XX% dislocation, conditions Earthquake drive third Our XX% second existing a California Earthquake California the from portfolio. on California our lines such risk-adjusted book of market and Residential premium partnerships [indiscernible] quarter, growth Earthquake Quarter-end, core to earthquake franchise reduced Commercial increased coverage premium, approximately grew the as Residential offerings we our X% XX% quarter.During as grew Earthquake market basis.

are from Commercial formation our maximum portion average year. rate best levels utilize in loss see we such business and business an grow for category both our bullish Inland want," the X Commercial the are the Hawaiian Risk, premium like of of excess and since on including XX. quarter, de-emphasizing profitability XXXX.We activity expected the and hurricane saw our lines to in and of condo reach year-over-year annual quarter.Our increases X% all year-over-year. goal underwriting written loss premium by property Residential reduce on property, One We in and grew product, lines $XXX million this is in premium XX% while standpoint property and we and XXX% Earthquake rate investing prospects quarter, and June lines largest saw Commercial risk are by talent remain we certain geographic the as Inland example the the other our capacity in Earthquake and footprint exposure and, minimal as procured a XX% to metrics we pleased at XXXX.Turning portfolio rate Hurricane.Builder's to transitioning as Marine probable approximately growth like growth excess noncat-exposed we Storm loss XXX-year to Commercial X% California.As expand Earthquake importantly, contraction this to to of as of book probable incremental XXX-year base our All maximum Southern Flood, Tropical Marine of "grow we September approach of as Builder's brought where the or line this business.Flood our year-over-year grew build Hilary of last mentioned losses increases accomplished and [ from of the XX% Risk distribution new the XX% Risk, property ] on year-over-year, derivation cat was the saw prime

Hurricane we XX%, model Commercial Exchange, All throughout clients reciprocal Risk with with Storm partners policies fully hurricanes and allows reiterate of in Lahaina the as Commercial our worth Hawaiian also increases that new from the exposure that risk-bearing XX% transition from catastrophes that from growth Idalia our an the fact wildfires excess quarter, to one products formed which also like remaining [ third from the hitting respect and balance premium and ] Risk Hurricane It [ as convective that our losses than impacted reinsurance a by renewing the business us This performed Tropical Hawaiian the event.During increase the during no sheet well it is in rate corporate all losses our at highlighting for vehicle with the licensed more inflation manager. reduce insurer and to Hurricane in guard.On Laulima coming that book including experienced of serve note, the a Hawaiian country.With incurred the will loss standpoint, losses All one quarter activity grew the is Hurricane, will costs storm to also book attractive, is quarter.It is and from minimal to Importantly, eliminate Hawaii. ] fee-generative. the I'd attorney loss incurred from wind severe we to we an the quarter, our for thoughts are Hilary, exciting average the

concentration long-term the XXXX, Palomar All commenced to professional including and and Laulima and net but allows We we and our pleased that firmly catastrophe perpetuate [ from should not market, are admitted I business we losses in in and profile.As Hawaiian the bore in exercises limits incurred the in addition trend products. losses results This remain cat exiting quarter, sizes, sound a grew note different to in with highlighted negligible growth help believe geographic also strong in the this reducing layer premium Laulima, meaningful into year-over-year, shared earlier, Specialty by gross third player liability limited only Homeowners, underwriting work, ] caps XXXX.Casualty Risk also mentioned a line to XX% shift year-to-date. quarter, implementing albeit

us base are to social management year-over-year, seen the September, we hired a bit is [indiscernible] casualty business excess believe classes to of book a liability. inflation.The of with loss higher X% strong decisions. in ratio We minimally with where we franchise. fronting, the a that surgical highly write casualty to talent growth quarter, our with performing history approximately approach potential longstanding loss geographies.Our involves to with minimize employ XX-year and and our social mindful environmental previously imperative prudent court taking adverse rate favorably another year-over-year Palomar meaningful loss third venture.The line in fronting foray as exposed In have into selective blended we this to we the business build-out be hiring deliberate expertise has industry book we rates in to of is areas Brian Casualty are increases remained of as build we having arena our and niches of casualty the reserve Pushic, time.Turning inflation a strategic risk been XX% that conservative up over sizable well building underwriting [indiscernible] bolster and to permits As engaged as discussed, expect partners. targeted in loss to in business the there veteran, develop our spearhead we delivered the

partnerships a in provide lines oversight are a fronting fronting thesis in business to select in-house measure were reinsurers compliance of leverage and crop current finalized we writing manage and reinsured. are maintain they and the when reinsurance business in our participation of fee-generative MGAs, Our we collateral a premium. developed in commence carriers expertise.We with the quarter.In risk is X fourth first industry business that of specialty a domain new services investment X%.In our fee-generative macro to goal have and fully These third XXX% excited certain lines segments where fronting write expertise that and actively participation of and to partners are arrangements writing of we quarter, the [indiscernible] October, at and group collateralized instances, of some

in MPCI growing insurance business and premium, is be crop XX% and from crop product premium tied third Our expect payroll The insurance. quarter which the to multiple was our we season. insurance, approximately of or XXXX livestock to comprised private the of MPCI,

Our MPCI revenue losses U.S. production subsidized program covers the a Management natural shortfalls in to Agriculture's Risk Department program, insurance Agency, RMA, offered due is federally with that of and conjunction of drought, causes a generate like we a underwriting. XXXX we contributor hail previously stated, as expect and growth be combination in will significant to that crop insurance fee and wind.As our

Advanced Ag we the the and risk for growing importantly, without allows regional of partner effectively and are season distinct us immediate millions producer has identified scale. strategic the level XXXX target crop, sector Protection, We premium high-double-digit and, with opportunities year.Our to that encouraged generate believe more even technology extensive in next and compete experience will at

and light quarter was to time as loss over the business targeting are variety the to XX just region.We single program, the have it minimizing exposure Midwest our core progress pertains goal June. date.As of third expect losses accumulation are on in Palomar our to the throughout successful event We core a we with with of a on renewal reinsurance excess pillar of or crop activity, heavy be of of to completed in pleased a tower the single crops,

is real catastrophe also This specialty diversify incremental role proven of record a will help accomplishment our During complex and year's be our in we delivered reinsurance the play in only we navigating With quota-share single-peril announce franchise our to Matt overall $XX guidance reinsurance our book cyber bode pivotal losses the range excess [ well to joined Laulima. omissions will loss Matt reinsurance, we in efforts. pricing our expense and noting reinsurer marks about estate in but His further Hurricane long and significantly that, Grunwald transition worth and of with exposure bolster not includes terms going at has income forward, raise third we and million market expertise portfolio of guidance $X.X term.We our Tightening year-to-date. core and beat quarter, growth enhancing Reinsurance our to Assumed landscape, year and, million. XXXX tower increasingly will pleased Hawaiian business. should this the our net reinsurance particularly good approximately our of and facilities the ] profitability million capabilities as our that of of panel.Lastly, contribute to quality a the adjusted insights $XX to oversee errors earthquake next our updated incurred are importantly, renewed it for expiring have Palomar support.Additionally, renewal.Overarchingly, to broad feel of and overall regarding that we results

catastrophe a our I'll turn As in our that, reminder, discuss over million $XX of $XX results detail. guidance excluded Chris to range call losses.With million original to to the more

T. Uchida

realized figure, you, include share in Mac.Please any them outstanding during incur of to share adjusted net return loss.As definition net to common we for our and and portion, periods per-share periods XXXX, a that net stock to on the as the calculated requires adjusted modified adjusted in methodology quarter unrealized and income, beginning for we I'm a note using when have stock earnings reminder, gains profitable common Thank losses. such equivalents, diluted This referring fourth adjust per exclude as equity referring and to per my diluted share us options, Treasury during when method.

current million prior share, of accordingly.For adjusted income million, the was or to per period of period for ratio the figures or $X.X $XX.X quarter quarter, XXXX, adjusted return the year.Our of XXXX.Our third million, same for third quarter combined our of compared modified income to last to was X.X% million, net adjusted for the third have equity $X.XX XXXX.For for on adjusted compared per the to the XX.X% income $XX quarter quarter same and underwriting adjusted annualized third the was $X.XX of was We XX.X% third our last net quarter year. compared share, XXXX, XX.X%, compared $X.X

of Palomar to validate maintain the line to top our adjusted premiums quarter written our target of predictable a for quarter on an ability to $XXX were prior return rate growth increase above with third equity year's of XX% continues third XX third the XX%.Gross return quarter. compared The million,

Excluding crop seasonality million our de-emphasized XX.X% growth the $XX.X rate of is products, fronting results the important quarter.Additionally, remember for include crop was the premium. It our written to premium. of premium

quarter. expect more premium in the on written But business, the crop sequentially the annual of We premium quarter, with the on represent some first of will that quarter in the nature fourth an based third basis. majority

Next premiums year's the year, ] category.Net increase earned X.X% of we quarter. to third million, into quarter were premium crop an prior separate written for own $XX.X likely [ third will its compared the

the second XXXX, XX.X%, quarter the growth the loss of sequentially For the to to of third a of quota-share of excess XX.X% ratio compared premiums percentage XXXX in decrease reflecting quarter with of premium our expected of net fronting quarter as our our earned quarter due compared full XXXX, business lines earned to of in reinsurance reinsurance was gross in of third use and that and the program. renewed first XX.X%

favorable million loss in third future including With should for maturing ratio development. ratio prior be point quarter the expense loss $XX.X adjustment period its mix place, excess million, at expect our were we our of business and reinsurance the the and program $X.X premium in loss earned of and quarter, of in increase third lowest net to this [indiscernible].Losses catastrophe

and rise equate warrant from the While during did these those elevated to magnitude out something loss. activity for we to catastrophe describe to losses ratio catastrophes, the differently, as was the loss as exposure catastrophic assumption.The these budget events mini not losses ratio company in losses quarter was loss for XX.X%. what our the quarter, there Said we breaking

premium but year-to-date our XX.X%, loss loss the catastrophe XX% events, catastrophes including now Excluding in the expense third This provide excludes the gross aligns compared large XX.X% percentage XX.X%.Based a acquisition attritional for our date. and a quarter we in mini year second earned the XX% expect to was future losses was ratio to the net of as third sequentially compared XX.X% ratio development, X.X%, income includes the on quarter to range for favorable and to loss quarter year, loss catastrophe last of catastrophe of we adjusted how with guidance.Our XXXX. ratio

the the premiums may underwriting commission [indiscernible] to mix last organization acquisition and expense our other Similar future gross invest continue ratio as in premium XXXX. ratio, we sequentially business our to fees expenses, of the ratio for to third quarter including quarter net we drive quarters fronting matures.The earned to to was Additional X.X%, and second modestly adjustments, up improvement. [indiscernible] flat earned go-forward that be the improvement in last compared compared year sequential in and expectations to of third year as compared X.X% to with continue in line to quarter X.X% continued in as grow. our our

as X similar the X.X%, from XX% the into balance of ratio, in this investments an held September of investments in We assets months investment higher-yielding quarter. income was last quarter of the invested to X.X% continue credit periods quarter see long-term year. made compared mix $X we sequential to we to third increase X.X%. was was a in while by assets the invest of scale XXXX, prior yield primarily higher compared a The year-over-year increase The on driven in for quarter expect shift lower-yielding in million, flatness and investment investment scaling organization.Our in third ended assets the the quarter third may year's net XX, yield third third a the with quality.Our average was

X-year, that XXX,XXX $X.X our our generate shares to a stock, the continue total repurchase asset for program. we conservatively repurchased of allocate attractive risk-adjusted $XXX into We positions quarter, million million, classes return.During under share our of

quarter ratio the our This to adjusted we on our to to Mac basis, results.Additionally, beyond range remaining.As from of the licensed the incurred rate of may our a premium levels we losses increase year income earned mentioned, have repurchase XX%.Lastly, the quarter, date.On to to premium effective our in As guidance and increasing gross remain the between Exchange, end are a to be catastrophe $XX.X tax the acquisition XXXX of million. our reflected authorized net current third the reciprocal million range includes share flat Mac $XX of of million mentioned we earned insurer. expense and formation net based elevated, $XX and market, in quarter fourth up XXXX modestly for Laulima XX% ratio expect

owned is the by note. its for not Exchange Laulima we the and While funding Palomar, initial surplus members provided have

results. line Laulima operating future, to Exchange as has consolidation.With the expect As after Operator? I we to consolidated history, separate Laulima to operator be In operating our from like of open that, part such, questions. the sufficient it our will ask Exchange would for any the

Operator

first Truist Hughes, Instructions] comes with Securities. [Operator question from Mark Our

Mark Hughes

Hawaii, The to whether earnings? say dilutive going that neutral change you was did accretive, or in be to

D. Armstrong

is this Mac. Mark,

put, simply So with be to neutral earnings. in Laulima it to we expect XXXX, net

I costs material think It endeavor willing line on more we're Hawaiian there it. very for the in new reduce it basis. paper.The stay will losses business Specialty.So real a on excited us if allow on to to Laulima it that's reinsurance And to and is we're has something we market. is drive to now transition the business that of what rationale onto prospective potential write for fee-generative. right Palomar to upside more than manage that can will Furthermore, about Palomar strategic allows cat exposure material reduce help us lastly, potential

I think, 'XX, In neutral 'XX. in whole, the be has potential net to accretive. it's on the it

Mark Hughes

Earthquake what the Has might Authority? material to seeing that of said Understood. be earlier on out a having behavior impact [indiscernible]? you your didn't real think And ability to I appear California in it have changed grow. you that kind quarters are of

D. Armstrong

from is We quarter. our impact so no CEA perspective. So on ability the quarter, in just side. to certainly is largest frankly, Residential our would happens which, It it's Earthquake our XX% the hardest -- comparable the a it's say having grow grew I on Mark,

organic seen others.But as and a collegial to stable business CEA. the coverages. with whole, alternative very because the CEA this or the production not has it I to in increase lower type its the quarter business in leave of some have of arrangements. more It rather, its as and decided step-function a explore exposure. continues back its in the is coverages coming so to that versus on We we're we a encourage levels impact fashion and CEA cull them.But said, the a insurers disproportionately policy-by-policy to new tries continues try a And with writing to participating But remain insurer its manage back, over culls to reduce participating collaborate competitor

Mark Hughes

trend continue last then question. on Chris, ratio that Understood. or taper gross, will expected quarters? do that stabilize? any And off, to coming Is in How go you earned that? to the of that how see to down will thoughts

T. Uchida

the the you QX full quarter, year loss the Based results. on X/X, XX.X%. was the full that of that QX loss at is have month you increase of had results this excess Based renewal only of of of excess reinsurance effect gross-to-earn where the X in cost. the the third ratio of the first quarter on in

a that increase, the was about risk comparison which loss at period.So a As number will transfer it, fully about X/X/XXXX quarter [indiscernible]. increase X/X/XX, we equates That that is million a, $XX excess the stated renewal. before, be XX% to XQ call million on to next in stable of until $XX

net the from And right earned expect improve now. premium where it's at ratio I to so

XX.X% it ratio moderately tick expect QX goes, we'll to overall, point how would the I and And expect up QX, you to be was for in go. expect QX, low depending I improve, QX. to in we let forward. renewal know going it But that ratio that to what that then So on QX.

Operator

comes with Lambert, question next Piper Andrew Our Sandler. from

Andrew Lambert

space Andrew results some versus the if casualty press look property at balance on insight casualty your looking could some you a here in part your wondering quarter. Paul. I how plan. I'm of just in in expansion was was as the Palomar there at your just of for give into and XX the you releases,

D. Armstrong

do we fourth that that the notably for matter.Long casualty achieved term, to segments but know of in but with level, be segment whether contributor, or can continued excited scale term, replicate scale launch going have like we we continue environmental kind that think for say make don't that scale environmental we were in going from meaningful a it's And a also incremental perspective. to investments the have 'XX and we of think to it really quarter, conservative also to in to professional casualty I very growth approach casualty with segments, to we're be nice contractor's that to will the market. to one have amount that most it's we in of disproportionate to diversifier in practice, it's in meaningful and or of that think Premium right use the practice. were some that -- book to Andrew, traction the can We be thanks a get and, that for up will considerable loss. XX% if a don't take a question. frankly, to of be it's a environmental, be pleased a a we think it's in the base shock a a liability I impact in book. the the and going reserves as going now lines we approach 'XX, of of arena reinsurance to position hope the we be franchise, Builder's reserves drive we Risk.So that nice avoid tactical build and a long generate

Andrew Lambert

thinking going then M&A about could acquisition earlier about that, you call some up guys provide guys are was in ratio you And just expense prospectively. hoping Great. on color following on how I the just the you up. commented

D. Armstrong

Sure.

of and a M&A, to stretch really think not So speak for Chris commissions I'll of any by and like.I the expense acquisition our in imagination. acquisition been customer us, acquirer terms serial the let we've

more We growth. focused organic on are very much

We suite, have have product at we our will opportunistically But room think look at for ample growth. what you look we deals. in if I

factors. growth multiple have We

story indefinite future. the So growth we will remain an for organic

T. Uchida

rate about improvement acquisition to up specifically, ratio potentially moving the that of a the of expense, business. from starting at Speaking last Fronting look standpoint. growth was see line business with quarter, an of do out lines to in modestly the come we rates our X.X% quarter. flatten the mixes for to is the starting growth other as it and some from sequentially We

usually have And start reminder, little acquisition gross that expense on flatter the to we we be a it can very the rate, more overall, lines good combined similar it. casualty, ratio be excess because just So fronting.But our of overall, that it be at of to just start ratios. feel as up tick at or we now of the all will grow whether basis potentially look increased on feel about type a a those loss impact whether

Operator

question with next ISI. from comes Our Evercore Motemaden, David

David Motemaden

caused I'm Hawaiian Hurricane for I'm off more cat on property has business. exchange changed, at something I just how renew to on And your your reinsurance and a as guys the the both of just focused has X/X casualty view wondering had just if know you that I the I'm how side. head happened the but at you wondering most through move guys question your X/X, -- has renewal. if all, we wind risk into balance sheet

D. Armstrong

loss we both, and X a professional address terms, casualty. support, and arrangements.So are as perform building incremental can this things expiring I And casualty base they that from on to did and a whether both we reinsurance it's a this supporting of frankly, quarter. market and we standpoint too, just encouraging. capacity start lines continue mentioned, from were new to with in as believe decision Dave, of that me bearer. at have you to We we're, of say up about.So current renew risk again, one perspective encouraged fronted us generate treaties usual good panel. is the And that. fact Mac. environment there manager for as a loss I excess pricing, reserves.As well from in as let treaties to attorney think I'd an Exchange. our the there coming reinsurer casualty those very they opposed reinsurers in Happy nice renewed And our all equivalent of a and of returns quota-shares, They're and business is questions [indiscernible] have Those or and Laulima did were

expense. very from really excess Laulima it's capital risk-adjusted, a generate earthquake an million ability feel do in I be and generating different X/X. think at that sound loss equivalent placing to loss from we prefer do portion as return excess out lower of more all-peril was do help program, success a exposure, if of also in which reinsurance $XXX for for equivalent, equivalent think from equal, of our that the return from would It I transition you single-peril, can reduce will sheet, get will Specialty all our not a good things generate will an of have risk-adjusted equivalent quota-share Earthquake, profile.Lastly, expense Commercial so not if remove We make and we Not just with above at pressure a book help expense return. standpoint.So balance superior, anything not very about attractive renewing also we an and reinsurers, have to of we to economics. that.So the not on it's management being an frankly, reduction, exposure our to risk we Laulima but all just result an to put as going similar just level And once Palomar the good more

all-time bests. underlying book the mentioned, our metrics I are Commercial As Earthquake at in

going reinsurers.Roll, X/X, is at that appealing that So panel digestible to modestly very quota-share we're from what leads to that up, which X/X, are at to too, reinsurance makes it's to looking we hearing to confident think forward, is book I perspective, us flat us. for if and out performance that very our us stand is it's believe very a our

that us to leading attainable. that some more factors to that up some certainly there think and are also us is And Palomar unique there very indicators that confident attainable. modestly so make confident that's make I are And flat achievable

David Motemaden

it. reciprocal. sense makes That Got on Understood. the

heard Would the 'XX And guess, the think guess, all it this understood So improvement still maybe ratio changes, outlook going I into we I XXXX of with on forward levels? attritional you just then about lowering the year XXXX? continued off there. and expect should Chris, I year. loss you how for full

T. Uchida

the great talked ratio expect did it a previously, to that's we improve. about Dave, Obviously, we've that loss question.

results. expected. happy it's I earlier we're think But little obviously, we maybe a the improving with than

all performing; guess performing continuing expected. I are lines say, should our, our of I lines of are as All

have in that some are You off. That earnings will that driven really period development. running release lines the by prior was unfavorable did we notice we

QX helps off actually primary this it year. to you was that. validate was the run development So favorable lines.The were It catastrophe of events decision from those driver the saw the that

So expect improvement. this I overall, the to ratio favorable happened have that, maybe bottom the loss improvement is happy of loss that we But would flooding where to in starting do what overall, there.So say earlier and from California some quarter. potential the But QX did QX. is get we're that year, this ratio with we we're development

We that a are still growing have lot them. with of very, but do profitable are losses lines attritional one,

as be we casualty. and lines runoff continue be to tick That our that so do could those Marine.And get as Inland out can loss ratio of time. So over those I grow expect to lines up see portfolio, the

of the wouldn't those loss mix surprised be let's call of up. maybe, and to in business.So by So the to ratio. year, business tick incrementally going see jump not I growth has back QX said XX% to moving think be business lines I it's loss going as to strong next a it's and the no incrementally anchored of But start to really ratio going it's surprises. driven is overnight, those that going before, of expected, but it, happen X% up by to, overall QX-ish maybe year, that as still next but I earthquake It

D. Armstrong

pleased very loss of will with And going trend now stay earthquake think be we I right XX%. growth ratio, earned about is too. and be add vacillations, growth line. points premium on, the the not on basis contributing higher modestly ROE in there XXXX, think higher with are the was but I the what saying. the to we indexing half into 'XX, of combined, loss nice agree very second an which Dave, up too.So to It may of is continue relatively kind adjusted And rate, a steady a state completely tick heels traditional to furthermore, and will Chris couple in a lines XX.X%, are business that kind those now. that feel it's of of Furthermore, the above ratio.So from we're on earthquake good wide will But of

Operator

with Our KBW. next Meyer comes Shields, from question

Meyer Shields

time [indiscernible] maybe Is outline that could you the for hoping going have was to the getting you I started. that be that gaps X/X? frame Reinsurance and for Assumed

D. Armstrong

Meyer, thanks question. for asking the

little us quake historically, extend to we'll What effective of will have where in this and an what renewing see a X/X property business more for our at we at franchise.So longstanding at uncorrelated a of track what better we structure you we we cost of on X/X. history. as and specialty lot write our hopefully, really to in. for premium the on bit and I modest; written X/X our again, going to of lot And [indiscernible] have year, definitely administrative helping we insurer similar some in we've taking ] we know, addition core program.And Reinsurance throughout X/X, X/X what And in some term, already folded business. Reinsurance it will exchange excess and look of [ are Assumed did Assumed already be, So for Matt that space. so joining look to a us pretty some has think kind place. property and next kind is set of it's geographies will premium Matt swaps, of, really allow with probably Assumed then partnerships to specialty is have actually X/X/XX, a more specialty exposure from loss our a bringing up in He deal.So write Re institutionalize it's we And deals. earthquake getting were at at as uncorrelated us done some especially arrangements, record more in instance, where What lack a strategy will average

Meyer Shields

Okay. maybe inflation Perfect. been hearing insurers, is and increases. That's talk on we've homeowners the side, question, this standard some but in slowing guard-related very about really helpful. line Unrelated

reason I'm book? to your that any So on expect there's whether wondering

D. Armstrong

the thanks question. Meyer, for

that, seen speak not to have We but I'm going to Christianson Jon let that.

Jon Christianson

change as so to performs guard watch inflationary we those through the and know, strong inflation And that book each factors. retention, premium and we continue monitor have of increases push you renewal renewal as push guard, inflation how Meyer, a to direction current to to to regard we through of our do homeowner reason push decide some partners with our continuing strong our no what we to activity. regardless carrier year, independent date, of

really, the So us reason change for moment. no at to

D. Armstrong

premised appropriate it's analytics then in probably writing -- has what the One, a And companion homeowners, the pronounced are are as underwrite underwriting to secondly, we rapidly quite the a and the guard has the to may value would of the a our be. things. But or for other one. most and that I homeowner have Hawaii X our alongside different come want cost foremost, it, what parts but with what And requisite our -- is products up maybe we would replacement inflation Meyer on structure.And moderated where our is add as thing would country. I carrier state sense determining we California, not first add, like insurance of if inflation one maybe

that's it, So I inform think going too. to

Operator

Andrew next question comes [Operator Andersen, with Jefferies. Instructions] Our from

Andrew Andersen

and concept of And a this this opportunities you Or opportunity? of reciprocal proof Just is thinking of exchanges I'm of kind perhaps? I reciprocal, there's there. as about a one-off think kind thinking Homeowners, view other do Specialty for Hawaii the some

D. Armstrong

a that's question. good Andrew,

lines. ability I sound And on think this rationale in Hawaii. we are it having to strategy very there's to a Hawaii. strategic reciprocal certainly a now, strategic that But again, gives us putting a -- very export is, Laulima sound other to in acutely place in focused for the

our it Palomar Laulima. to the is where because model Maybe Specialty for work. pony. at see a does exposure that XX- a up have We exercise point, onto to it and elsewhere, one-trick of our heads But export now, pick off XX-month transition we'll we can

Andrew Andersen

And it. update what that that in the maybe loss us Residential an of size line? maybe just and Got business Flood, this the to ratio you is, of can on give you're market underwriting

D. Armstrong

Sure.

Flood on flood. It's me, is let over Inland I'll what exactly strategy, I an come our inland described. Jon So and top the

So coastal the of not writing Hawaii really exposure. we outside are of state

to trying avoid stacking are limits. We

So exposure, not hurricane going if write we continental flood. have the some we're to

how Western we'll do then and limits continue we've more Flood proximity be we're We What risk in in and GEO code. that's to think competing underwrite tends a that Midwestern level. And to as XX-by-XX flood location.So a the the and looking in Pennsylvania.It's states kind more really Inland been all so. do to grown perspective, in to it NFIP. primary with a much as is well meter most from zone floodplains factors write geographic Northeast; we've at So notably, granular and in I elevation deliberate of

is from We stack well. as to use [indiscernible]? want do don't E&S are company the to loss exposure want you targeting this we a to fashion one perspective.But limit increasing But in where Jon, an stack

Jon Christianson

perspective really, predictable losses. So I from mean, we're loss targeting a expected

So in write in not as States avoid coastal of currently mentioned, loss. volatility areas do the Mac United we to the Southeastern

price the lower-hazard pull-in a product to zones. exposure And able level, from so profitable we're to

profitable predictable year think heightened And consistency would will delivering expect. perspective, fit we on XXXX higher-hazard loss that really I zones, ensure And is a in granular level loss results. the Flood a even We risks from targeting in of write performed to some priced as a product those but ratio. business the a

D. Armstrong

to is I going that typically. think XX pick on loss our a around be

T. Uchida

example Hilary. one on, this of I'd is did that, to say have to we good add quarter exposure

performed that. And our book very in well so

We the losses rise will that, separated have based performance from book it it a our some not on the catastrophe. but as be did of needed that to magnitude to

the So the overall, we're broadly very during and happy performance of book quarter. with the

Operator

Singzon, comes with Our Pablo next from JPMorgan. question

Pablo Singzon

is first for Chris. question The

and of the sort everything talked point, year, ratio the point? in in directionally thinking gradual as point. I 'XX? you're uptick look 'XX of were that of what's that of combined half, X.X a next you and acquisition I to put think you this together, to flattening the every about maybe still the So into past everything had guess, it a like in the at first doing sort cost you you second are exchange. the X if reciprocal Is maybe loss the up that guys a trajectory happening you year half things about, go simplify ratio, company, ratio are described and the improving to this of lot given

T. Uchida

additional I ratios our the of year, ratio have thing when one impact I expense of at ratio, in to the is on loss that's earlier. the talk $XX and I this think think does about more is directionally underwriting million reasons expense denominator a And million expense cost of still One ratio. the the additional gross That looked about of the other acquisition it about of costs of about and on want and $XX you talk accurate. excess try that we cost basis. talked

to to that you're And quarter, add ratio overall the going does get. so that this

that to to XX%, would have tick and point, were that. improve. probably So to in That up, to we those you be XX% been when around ratio the have about XX% about X.X% for have by mix. that would potentially probably to been did previously. We're driven look business gross get this that's was ratio of lower specific do at if piece expense I not XX%.So I ratios expense, XX% modestly a of even and in acquisition growth to we guidance. the be to quarter for much But give lines flatter overall, going your on they a up loss to standpoint. and combined would The been going like than is you it about not not it, try of think expect our lot additional there. we expense Fronting to too are XXX% do fronting starting The rates big to come But expect growth more line. as ratio try things ratio expense a

expense. commission acquisition And the not ceding so outpace that will

QX. expect in X.X% you look about underwriting at the to X.X% it this expenses, versus was So flatter.When ratio the other bit be I expense a little acquisition quarter,

the to it some Assumed side drive underwriting to Mac environmental help go new we're So going stop and down, on investing. did business. of but have we some team not Re members about the talked

So we in those teams. will invest

invest in so for the everything ratios I I little But flatter if sequential those will expect underwriting expenses.So do pointed scale the it overall, systems.And were their term we to be you performing We costs. some a up loss of excess basis, long push over see out is to ratios can to of make a in expect. flat quarter on in impact that higher ratio that potentially the might looking do while we'd other denominator than the sure want those with it loss excess and does at cost as

Pablo Singzon

the this down like That's a X% from net fair covered various in to point. this look at [indiscernible], one if last question is had, about grow then of you've I premiums, we past, certain second track which the reinsurance and And year, reasons year on lines. earned the they're because of XX% runoff

as had think offered Mac lines. my guess thumb in rule the a cushion sort XX% growth before, I for of earthquake, ] can is of grow [ and newer in you probably faster

it manageable to the growth lines certainly earned of would stable that So these of your net from to track maybe think will growth improve here, [indiscernible] environment as reasonable gross if sort closer premium they grow? you a here, assume be but

D. Armstrong

Pablo, you The is great yes. that's answer a point raise.

disproportionately noting. scale pretty rate.So and each year, especially potential one our doesn't pricing great disproportionately reinsurance to which leverage the point model, Net to there So will think premium for nicely. should chance especially we up a in a one pricing earned other fronting as I the if and is reinsurance faster decrease XX%, promise go growing and as has stabilizes, at is this net good -- it growing has follow think won't your be years.So yes, future worth closely, now gross operating in

T. Uchida

talked dollars basis, a that on way because on reinsurance excess it will now baked should off to like is of compare X/X/XX, essentially from a fully next how best move harder call to is should think dollars a a of QX amount, and in. little it like change going of you a good excess a the loss said, to that think years as to sequentially a more you think It's more until the dollar basis, the sequentially that it, be quarter-over-quarter up. and loss I I out and those I try about little And modeling of that on renewal. base cost seeing especially, based just little about. standpoint, quarter-over-quarter And let's model QX, prior using the those things But all the of not

Operator

the end I'd Mac the have over of like We to back question-and-answer now to for call the Armstrong turn session. reached comments. closing

D. Armstrong

allowed reiterate want and all I Operator, quarter this of your achieve Thank appreciate joined to with conclude, third am to morning. team how our pleased them. I who am proud our and questions support.To participation, results us and you, thank you your who your us how We I

was on beyond.And moment remainder are day. to thank of that a growth year, since all member as to you ago. predictable closing, greatest cheerleader. and a thank and board of also was some recently want involved team, adviser XXXX We'll well dearly.So away. friend and we to of our board believe before an our Dowdell, this directors a member and the We a objectives positioned care. are our earnings Take who focused and of your enjoy profitable Palomar's passed accomplish formed rest the we of on and years he the Bob Bob mentor, and him has to company take these again, XX just I coach for miss He been leadership

Operator

This concludes conference. today's

you time, this we at participation. your lines your for disconnect may and You thank

Palomar (PLMR) 2 Nov 232023 Q3 Earnings call transcript