PLMR - Earnings call transcript Q1 2024

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Operator

Good morning and welcome to the Palomar Holdings First Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded.I would now like to turn the call over to Mr. Chris Uchida, Chief Financial Officer. Please go ahead, sir.

T. Uchida

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

call. Additionally, Jon the the during to answer Christianson, our President, Q&A is portion here questions of

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

D. Armstrong

Thank morning. you, good Chris, and

first introduced we maintain We goal best-in-class frame which returns. remain income adjusted Day quarter growth towards Best return and much of Category an a our our want, growth This net in time to XXXX, help was nice our on $XXX we've the Casualty young market-leading increase history. should the channels quarter attract result to delivered premium certain demonstrated ability quarter of earned of at celebrated of equity Casualty where first end the Size We generated XXth Crop the drove we track adjusted we X period. talent.The with During our net strong accomplished this quarter gross XX.X%, illustration the and our and XX year stockholders' financial and combined again on produced open while us lines, objective. us earnings.Five first birthday, a surpassed our performance Palomar Financial is exciting steadfast its means X-year moving XX% our of terrific our level especially risk-adjusted goal Likewise, off net our with premium grow and of strong into of and product adjusted and achieve XX.X%.Another start, quarter, are Investor another Other growth from the how tracking commitment of to doubling income is quarter, achieved fourth Palomar predictable franchise, categories shorter June growth in products. AM we from this growth written in XX% to to in the XX% over Crop, a of delivering market growth XXXX. This XX. profitable contributions Property are new in million, equity distribution is a Earthquake with of segments, profitable we

I'd this Earthquake, gross results, earthquake, Inland point limited transfer and will premium Property, help Fronting, XXXX investors way us over believe not partnership. out our in franchise, performance quarter strategic to to this Marine of XXXX. on into provide of with how from conjunction but XX% forward.Starting we nonrecurring performing understand First going portfolio Casualty, beyond.Before as our including is benefited will are well We to point first our carrier attaining in quarter our product Crop. this our XXXX objective quarter first out of the that commentary, written to and puts I categories: like with and that better It Earthquake market came grew a Other we premium forward, we and premium that move and the our important X the businesses on quarter dive conditions in

Excluding grew on XX% basis. a this benefit, onetime same-store our Earthquake book

that XX% premiums confident high-teens grow We Earthquake in to the XXXX. in will are

stems regardless Earthquake and Cincinnati a not production one quarter of inflationary attractive go perspective. the and guards residential in live policies are did cushion confidence earthquake the second commercial, compared consummated increase XX.X% XX.X% market The rates providing most increased from to X% partnership as the notably should Our market levels partnerships, quarter fourth as this the pricing a now inflation residential remains in annual quarter. of above stable several from and of that provide Commercial as X% half well condition. year.The increases to one Financial, earthquake residential factors, new of fourth the in XXXX that with April, until

from premium from reinsurance term. and XXXX While at all-time This loss over increases levels. probable growth near translate levels, earned should strong previous to into loss moderated best XXX-year our have premium of levels key of cost portfolio metrics, ratio, annual as are the net the loss maximum rate moderates average excess

of driven business. the Earthquake we grew and by Risk Property and our business year-over-year, excess Inland on line Builders Hawaii Marine Other XX% prospects remain products property, of positive profitability and growth franchise.Our forward, Looking national our Hurricane

we are our and exposure. our in certain mantra this in I quarters, managing, best set where want wanted cases, saw growth where has reiterate, a we reducing grow pace the we from is that that While in this product category to and accelerated recent typifies judiciously

Specifically, our Laulima our limit adding Marine continental same-store not Reciprocal exposure as had our reducing quarter. Exchange.Builders and in in Risk, our the to hurricane-prone sheet areas balance policies product, we we largest XX% growth in in Hawaii are the transition

property a Our teams saw excess quarter as of approximately our non-cat-exposed property and portfolio built the rate year-over-year XXX% in X% growth line increases national business.

premium rates the heightened For activity. rain business Risk first growth quarter Risk the flood business that prior to in hired of both down the in Builders and quarter. somewhat XX%, business sustain moratoriums property, by California these due will for while national experienced underwriters the regionally-focused Flood and the muted lines from throughout XX% we excess believe XX% new XXXX.All we grew increasing written was The XX%, grew growth year-over-year quarter. in in

line were combination increases, January quarter's inflation Importantly, catastrophe the guard losses quarter, of major on written floods last paper. and our with in in on California provided Hurricane estimate the associated with new Laulima rate first premiums business a grew call.Hawaii in in the XX%

policies Excess real Casualty is bearing over all previous our commercial exposure Importantly, were business approximately complete, hurricane growth in errors policies model in sheet liability, lines the year. worth our Insurance policyholders product liability. grow the to are made talent and is over distribution sequentially. contractors, embracing Hawaii.Our stood reiterating It Strong saw set robust course transitions Palomar in year-over-year quarter XX% allowed out to and liability Laulima the eliminate we in performing as the converting to with professional that quarter. but of and investments particularly fee miscellaneous fivefold from and the one in increased the is XXXX of Laulima the premiums Company the excess omissions, first general Once XXX% XX% Specialty generative. estate book migration of to one balance from will losses quarter that as and that risk

general to XX%, had XXX% growth rate an book year-over-year. contractor's liability close Our sequential while growing identical of

growth liability We Our professional premiums XX% niche remains and of severity comprise size, XX% in reinsurance conservative write. other underwriting than risk employ grew heavy potential market. prudent a sequential seeing and year-over-year, approach high gross of Casualty line exposure, such modest our which less loss conservative while bodily of management book, XX% we segments classes still the targeted tactics avoidance injury and anchored net in in the to ] as our [ strong products, line a total increase.Our

we rates increase contractor's increasing omissions decent increases Casualty the blended professional excess a saw and across real The to general products Additionally, an liability errors book increase rate continue in of XX.X%. book was book.Our the saw X.X%. of estate see X.X% liability X.X% with up liability

pricing book are that pockets there a up from was private softer are X.X%. While company perspective, D&O our of Casualty certain

remained loss are our loss loss We rates picks. ahead line book's the staying continue quarter, in costs.For Casualty the to ratio our conservative with of believe

reserve sizable Growth favorably the was Fronting old, is year-over-year a grew things. less book will As premiums are the building believe predominance the than modestly in that of focused over by we on a quarter. years few impacted first X in develop we time.Our business X% quarter the base

our as continued see fronting decreased competition average heightened and cyber pricing soft its First, to program X.X%. renewal

Second, ramp to forecast. than were initially X new partnerships slower

did pipeline new quarter. we our strong, while this Lastly, is any add not clients

the we no to the approach securing do a ensure start take writing Fronting reminder, surprises. million this our a comprehensive a As very slower than will We in $XX.X Crop, XXXX, programs partner first selective quarter. our second had in newest of year, bring XXXX the the product experience relationships new expect but Fronting others.Conversely, and on the of of in management growth product strong premium group, portfolio set to very half to

Palomar's function with acceptance for is technology we premium with attractive guidance model are in now quarter. risk. our our $XXX book market should a successfully has million. service in married to Advanced take than geographically-diverse an of X% exceeded assemble and expect we our next customer not strong and million premium expectations, data-driven Crop business Production AgProtection. of quarter.As meaningful you up AgProtection's written participatory longstanding where in reminder, Crop is a our of participation from taking we and so a this a of and risk management market We previous more that success more the relationships, seasonal, partnership front, The underwriting Also, way the much forecasting XXXX, XXXX. are XXXX, and Advanced expectation Our risk more $XXX will premium than in are written expertise

the date ahead.Turning activity. quarter our with treaties, and lighter to that loss X traction are reinsurance, several earned placements, first That engaged still pleased the quota is meaningful in in net core premium were X years said, to Builders will June and of are confident and sharing excess generate on Risk. the We placement we including we Casualty

on better We ceding and terms quota Casualty than pleased renewed conditions. treaty's the and the commission we expiring, share the terms that enhanced at are slightly

Torrey marketing Risk line X/X [ gross as our core amid We increasing catastrophe Pines also while placement, fifth our share, net improved the Re, the and economics bond. ] are on quota as XOL our Builders capacity.We well

are progress to by We key date the on endeavors. both encouraged

we As treaties X at discussed of last January we decreases renewed on X%. had earthquake quarter, risk-adjusted approximately X

here sit and January the certain bound, we core earthquake implied tower are to X. risk-adjusted layers directionally of our similar today, decrease As renewed on is treaties the

million. $XXX increase and of so of confidence X% guidance.To reiterate, in range conclude, the is embedded for to with our beat does still X/X the XXXX million guidance full will placement a we are our risk-adjusted we income program. price our full or X% $XXX million are to encouraged excess we encouraged to business from on in raising core trends year to outstanding, $XXX meet While by loss our million XXXX the guidance increase affords are that It adjusted most our us results assume $XXX the net And the far. year

Lastly, our adjusted to above XX%.With of of Chris over target XX I'll midpoint ROE our discuss an results implies the that, our turn in detail. guidance more the to call Palomar

T. Uchida

XX%. note method. you, to stock compared any the of net to incur of portion, diluted for common XXXX, during a referring was This net requires share using per the quarter when share to that net net profitable Mac. share periods I'm Thank as loss.For as in $XX.X XXXX, stock quarter share adjusted Please or income first $X.XX us methodology during million outstanding per when $XX.X and exclude adjusted to referring our $X.XX share per share income them include my earnings common of income of calculated or and figure, per million options the per such equivalents same treasury growth we adjusted periods

$XX.X income million $XX.X first underwriting compared adjusted last was Our year. to quarter million

XX.X% to adjusted the XXXX. was quarter for in ratio compared Our combined first of quarter XX% first the

last to Excluding XX.X% year. same first compared ratio XX.X% catastrophes, equity the quarter XXXX, for our the period annualized for year.For adjusted XX.X% was compared adjusted XX.X% quarter to was combined the return of on our last

to quarter prior predictable first adjusted Marine our on $XXX.X written XX%.Gross quarter seasonality Crop, compared first the Fronting premium the of of validate return is an maintain first of premium. and a Palomar XX align remember the were to Based compared premium written increase XX.X% second quarters. Earthquake, for quarter. for Inland first with The Along third quarter. majority with an modest XX.X% premium year's premium crop premiums The the the top return Crop year.Net Crop.It year, expected growth to rate first expectations, will equity year's of to be premiums ability key first written regrouped in million, the our also written $XXX.X the each for fourth target earned $XX.X important X of of above million Crop in our to the line Other our the of products: and should were the out current on with to continues only about of prior our Casualty, Property, our our increase million, quarter quarter breaking represent in specialty we with quarter XX% the of premium insurance and

net mix of of that to that business of For risk-adjusted low basis, XXXX. of and increase share point increase use our of of reflective loss premiums percentage our a follow quarter our of ratio lines compared program fourth modestly, our to quarter and the the place, increased our year-over-year XX.X% the the the the we business as and in earned renewed decrease net our on premiums excess risk-adjusted in reinsurance program reinsurance our XX% of quota Fronting last XXXX, earned sequentially from excess premium reinsurance of gross year. compared in The June.With our loss was maturing last a similar of on premiums costs quarter of is has and excess XXXX. quarter in reinsurance earned to Based of first earned XXXX in third ratio cost net the continued loss a its assumption -- as to first growth XX.X% will that expect of pattern ratio

were a X the expect ratio increase quarter there, pattern in expect in second this the We premium treaty renewal. slight of third seen non-catastrophe $X.X expenses ratio to first what From with of full ratio the to for decrease loss was the a loss activity. losses of the loss earned we current the have comprised flood our $XX.X The ago. similar ratio the for point over low million the net catastrophe treaty and through million year.Losses year June reinsurance the to quarter year, a we million, $XX.X adjustment quarter, losses and for ratio XX.X% the quarter XX.X% compared attritional of first of quarter from of

and For quarter, catastrophe loss was attritional XX.X% ratio ratio the first our was X.X%. loss our

for the XX.X% was XX% of ratio of earned premium to quarter compared to for line first quarter year in XX% gross in loss last year.Our the quarter approximately and XX.X% as a to percentage the continue XXXX. first with to fourth acquisition expect be We the our expense

to continue as and the we the to compared first grow. premiums as line X.X%, organization in the quarter fourth including Additional adjustments year-over-year potential our ceding and quarter ratio earned growth of to continued With underwriting for our expectations the of as for X.X% drive some the commission flat and sequentially to with with to improvement. in first of XXXX, year fees other be year invest ratio business, was quarter for the in to we expenses fronting full expect we same mix continue improvement.The this gross our last

balance during March and first to invested generated We due to held cash we invest flatness $X.X primarily assets year-over-year long-term increase on for continue XXXX year's ratio, scale was sequential may the of the this investments X income to see scaling investment while as ended to we higher XX, periods compared continue increase XX.X% the in prior quarter. of average organization.Our to million, yields due expect in months quarter an The from operations. higher was the of first

yield the that quarter yield average the X.X% continue allocate Our attractive repurchased to first quarter. quarter the The -- X.X% first made compared positions the in we to in last return.There year. first generate was X.X% our risk-adjusted quarter to conservatively was investments in compared of shares were no assets during

the new While the to our a ratio be was authorizing program.At corporate X.XX previous a of plan governance, the share has written end matter expired, to X. as premium will of we net good quarter, repurchase equity

the raising adjusted growth.As reached mentioned, range to equity to $XXX.X -- and are $XXX net of growth our activity. guidance severe income to cat loss has the that Our Mac mini expectations a XXXX to adjusted of to XX.X% implying income million, estimate range. million full profitable testament as important our include we our our year remember storm guidance midpoint $XXX at It's such net stockholders' million, convective

XX%, we which the XX% any expected I'd ratio.With of X represent Operator? loss our that, open to of including our the to For points cats, line the points our questions. be expect ratio to operator X to loss to estimate like year, mini for approximately ask approximately

Operator

Paul Newsome [Operator Instructions] Our Sandler. question with is Piper first from

Jon Paul Newsome

quarter. attritional think past out should as 'XX we case. the to Congrats look still I it I just loss was fair wanted past, was that but that continue on answer that the say the confirm ratios to in to Is rise? the the

T. Uchida

also Marine associated and with Inland have of lines and Those special Yes. as XXXX attritional property to to obviously overall the property, we point. change, No, loss does ratio XXXX, comments. throughout them. then continue We business in tick good the into the to as losses will expect for and well and Casualty lines -- continue Crop. like thanks mix still Paul, up attritional grow

that we up go to go moderately, this that we let's XX% up XX% maybe to quarter. call is This to going quarter from, expect X And or points moderately. tick don't quarter. just so, to it, a point Again, expect next X

D. Armstrong

add he won't would Yes. is would our business, then, share the still in to our lines And balanced XX% Paul, this that in Chris risk swing Mac. participation to quota of I we it's our like said, going this it Earthquake thing because only agree. that The I like XX% is, year. of feel wildly referenced. grow use

provides meaningfully under-index that to it's ratio a anchor loss going X%. So with attritional the of growth, and not its nice

Jon Paul Newsome

give a your environment out recent of And but growth the from most mix from Great. most sort on maybe, in would And picture, your and way E&S, data came at be very -- the data think know several big I competitive of that commercial us perspective. you you of There's E&S. update, last thoughts specialty talk of could the as great, simple seeing there you're the weeks in because competitive for that's from lots a an your what out just look thought recent to thoughts E&S?

D. Armstrong

term Yes. discipline year it's a But that would say that Sure, and to is broadly describe and use leaned there's property in side. I integrity that would market. Paul. rate right would the the would pricing. the say -- was ago, have I there in say would market probably now, I this now, the I on more broad-based

really our rate of and see was seeing of did excess You're same consistent dislocated. you And I exception it up Property a of with D&O when loss increases as level cyber component that the ago still in company was the in that be Casualty, we seeing private costs. MPL, more rate and severely and were not increases, that highlighted, then, at may in year the

pertains say there what E&S out that is admitted the thing, E&S and flows what E&S integrity our or other stability company side, been as and we it product. you is, -- the that business, seeing been we And has the a I on side. has say would you on out from for always the I But Palomar's it to are for business. would in E&S rate if there.The I point traditional writing with admitted and think E&S filing And is are So specifically flexibility with there market into is a basis, flexibility. since the before instance, the mirrors even earthquake, an coverage rating an residential our do always Earthquake, commercial basically admitted write can E&S book it formation, market not

book, not the market. into rate I it flows think we And of E&S as seeing integrity. seeing are So, our pertains to admitted we're out

Jon Paul Newsome

had Great. the from Maybe got but question perspective and trivial, on a we I this that product might little interest a that or any impact Coast East else [indiscernible]? you morning. anything bit you from just either see little the earthquake

D. Armstrong

jokingly those Yes. call marketing events. We

enough And for evening of of earthquake in the so -- densely the and Empire, on California, and the there's and part feel about X.X actually magnitude, populated people Inland cover an news state, to it. be the the to newspapers enough

does So of -- -- we not awareness, in bad new attention, that York, those in and that's drives does because it to tick-up garner a a so earthquake York we in media don't New thing. bit a a it New write lead but like so little some An sales. is business lot

Jon Paul Newsome

question next Mark from Hughes Truist with Securities. Our is

Mark Hughes

net year, or ratio, maybe was anticipate do quarter think out? bit I one XX%. XX%? little The think premium a -- year's better this maybe it'll third would it last that bottom Will you earned

T. Uchida

question. Mark, great that's a

indicated an as the think we reinsurance increase in renewal. as I we X/X costs go into our still the we expecting in prepared are remarks,

winds still I increase expecting think our favorable a and are there. guidance out we right our are But ] there. expectations, some there [ in now, slight

our plays with little our expect QX. point see let's low you of earned the how mechanic be that a of QX net through stair excess on still with based kind should net earned I would step type the So then, you from down our call it, as out, loss ratio that go assumptions. where might it pointed bit out But in was of premium ratio premium current of you know that, QX and earned premium, net that and the

very I to play this out over of similar I similarly, -- low-XXs. as was it year, well. last year, next treaty year expect really in would trend dependent the expect year, model, think that renewal what pattern looks But But slight would earned QX a I similar ratio our like. premium in mostly you saw this increase. that what to we in net have a on our

expect saw -- to premium what ratio So lower or year years, you the year, I slightly this would over last compared close to earned net very last excuse me. but X

Mark Hughes

And migrating Okay. should about bit, of that then, little when offsetting think be of higher we up a XXXX, some losses? kind the

D. Armstrong

Mark, say, is Yes. of that's going some Mac. would be to this I driven, frankly, by Crop.

right a now more with is as Crop participation. risk we So really X% of a participatory described, front,

it Going forward in more take XXXX, we meaningful. will

would that reinsurance driver So, it up. decelerate drive be If to would of a help or it. starts that pricing decline,

this lines inform you as participation maybe in net beginning growth that like group of should risk to help potentially in is tick more, year that well. premium 'XX selective Crop expect will Casualty that because So ratio and business up that decent earned and mature and our a season to

Mark Hughes

trajectory that? it's -- you when to say all And think step? planned, the goes on what's you what's when the next about step Yes. If X%, going up as

D. Armstrong

you're I'm X% Is sorry, asking? what for the that Crop?

Mark Hughes

Yes.

D. Armstrong

would premium wrote participation. It to worth. a very was franchise profitable the amount line and very a there type for XX% what we was bullish we and XX% that Yes. for build it prospects I very XXXX, of on meaningful but can that in think say We're modest book. a it's

Mark Hughes

capacity a tend market? commercial demand? that broader within to the broader there supply property is tied Yes, just exactly. parallel to or dynamic separate -- Is Or how commercial demand, quake? quake, The does commercial and that that much and is

D. Armstrong

think I is Earthquake unique line. a

-- large layered and you loan. For to a business, satisfy shared commercial have earthquake, coverage especially to need commercial for that

assets people equity are that in writing areas mindful you're value. very considerable think of I have protecting where

don't a tried risk. market, So broader participants mirrors it it and you where multiple think the is the singular market, because have especially true on I layered property and shared

a X If you're quake have schedule, property to not insurer. $XXX you have million going

going have to You're to XX XX.

reinsurance some that in of it of the reinsurance follow I because market, nuanced. and the but sense of degree pretty in the and pricing to think coverage primary it's does not cost So participants. And nature,

Operator

with is ISI. Evercore question Our next from Knudsen Peter

Peter Knudsen

My wondering the up. first of question if how and those just updated mentioned that's you I an in expand believe midyear you costs on could remarks. shaping increased on expectation bit is views a I'm renewals. prepared

D. Armstrong

the of Yes. Thanks affirmed question. increase I reinsurance. Happy for the guidance it, the to X% a, do again, of for just we in start call our year, the assumes say so. and year, What would cost is, the what

in of the or the at beating minus that of, by right I We as plus that midst small X said, we are placement We January and our down were treaties now, renew X prospects did encouraged are number. X%.

in coverage that or but some plus bound April covered, is have ] We early incepts that [ minus and X%. bound at and X/X is down

of XX% roughly total constitutes tower. that So, the to XX%

do. So there's to more lot a

in the on bond to including the conservative we assuming. out what we want market we if So be in initial price-up our gives confidence it. certainly will not cap are achieve that in we But hearing put exceed us is level, are that all indications, -- with we that what

Peter Knudsen

of Casualty could question rate the that you more and great. feeling market is around bit continue. strong expecting I'm lines little driving My Yes, a you those But in trend growth the also strong helpful. in about bit the the about That's that. talk you space, current hoping if a then, guys little the mentioned growth. second and that and how to are Okay. that I in lines rate loss know same was some of you're and acceleration

D. Armstrong

experience have the casualty Gerrit expect great investments great do talent We in VandeKemp most come with like pedigrees in considerable a perspective. throughout see year. across and We've to made and leadership Casualty and Pushic from, from followings importantly, growth Ty good and People great the Sure. market. Robben, Brian

investing segments. from to balance meaningful a are them underwriting sheet resources, standpoint, market franchise these we system in standpoint, niche build and from in incremental a from So want a

would that management. million, limits into so a the right on exposed we When meaningful gross lot a Where side about we the market, the million going like line then, liability conservative cover Again, our risk is or the I matter. think $X we sit for a or $XXX strong getting it $X is feel severity balance And and swing selection that range in costs. also -- now, conservative base Whether we we the have are a are are million. by are doing have underwriting sheet Whether side, we we are from say leadership informed avoiding is rate of what that $X nuclear different that place. -- standpoint. adequate So now, we fashion, loss gross earnings that, though, line professional our you in a fashion our verdicts controls. net doesn't max in classes general liability to million our materially but right that's we

We probably X% casualty up Excess was X.X%. book general against X.X%. think cost loss to Our liability X%. was up that's that's

our write like. company liability tough, we suite, I I that not loss of D&O rate in as getting and think Casualty type not private are lines the that professional not It's lot and rate earlier, of same cost. to similar say, level term a mentioned we the of of inside have that, miscellaneous but are that do write a lines do rate Financial getting it's again, that's or we'd some all integrity.

is, X/X excuse we be with X/X exposure have when to our improved conditions renewal, the picks, reinsurance conservative. much loss the just at and at look they're panel were -- and have we me terms we think mindful They and there. thing So say at would pricing we improved last got that by how I there.I vetted think you of our

So I think that's a validation.

we greatest our validation the pick results I the underwriters historical of is is that brought these above meaningfully loss on. think

the Casualty think a do execute leadership feel feel our And is, niche us upon what about that's we lot, focus, about So we I reserves that. will be soon. good exceptional but I helping would have releasing say the we strategy, know we that don't anytime

So we're to conservatively base. reserve going building be the

Peter Knudsen

That's really helpful color.

Operator

is Carletti Our JMP. question from Matt with next Citizens

Matthew Carletti

in has residential resi What quake thought was bunch. My tight for super at a How sliding get particularly you and happened? people and the Or question has tight change are rates I Mac, that have bit? book seen where sticky? ask they hoping other all? that a are are homeowners. maybe gotten little areas things in little the Have process seen on a gone high-level a like California wallet you market like kind quake been have of a terms paying feeling of retentions up ton your and retentions book, as to retention more homeowners

D. Armstrong

that bit of turned a residential a great book turning by to mid-to-high to say great Matt, Yes, consistent. into starts we've in from share, headwind able that's the be and to and that would say down We're on question. grow are to home it up in retention market going nice I'm a And always It's focused XXs have play over us. more, been rate just I'm of hope and come having the -- is people could pleased a more are changes been But changes and we when that to areas quake a by the level. has new our partnerships. are continue But a and inventory quake. taking I just been that call Authority, at new studying now in happen. kind this headwind. homeowners provides premiums of I'm lot sales been rate question no rates optimistic, sustain tailwind. it again not with and to been of going right the Earthquake that tailwind our sales earthquake-exposed pick our come, a is the as when win. because current as that We're going it not a changes for there because to it, California strategy because also growth home high-teens, is. of mid-teens able partnership It's increasing franchise, we've

Operator

question next Jefferies. Andrew with from Our Andersen is

Andrew Andersen

little quarter. Fronting, in the growth On a lower bit

were ramp. partnerships to slower some mentioned You

to, company. had for pointed index I Fronting year full that in you growth the case? and overall of growth perhaps, Is previously think still

D. Armstrong

Yes, Andrew, good question. Thanks asking it. for

think I not it's case. the

growth. I think to the it's going under-index

thing So portfolio is, X good have the products different in categories. of a we

all Some cylinders. are firing on

relationships slower Some to the of is brought There in A larger say a one that growth our few headwinds I ramp. of rate would up. is are rate. little that of partnerships are is the indexing our bit now Fronting new one I under-indexing.

pipeline, will portfolio We the quarter it's expect like it the and to the to of Fronting of growth than first company. Its to growth is look partnerships, slow. a going going to more do have broader add but rate we our

Andrew Andersen

it. Got

on residential about the lower ratio? an for have here, Earthquake, then, Is high-teens, one XX%-ish expense the of it product And impact ratio If Okay. does expense mix between the I and sounds like full think other? year. commercial the on than

D. Armstrong

the residential in just we've the had market, earthquake, because parity. cost the now, be this a economics bit that at increases of little right been -- unit earthquake might commercial are in But Historically, seen of a level acquisition almost bit higher of a rates, The lower. margin. underlying is

earthquake same residential XXXX earthquake or are the have So, policy to a going in policy commercial margins.

T. Uchida

we expect on follow-up on gross we or a that whether on a right, look I ratio be think be the flat Fronting So One of for changes you When quarter, basis, it XX.X% the earthquake commercial go ratio year, Yes. pretty forward. expect overall we right? acquisition to for even dynamic, to expense at mix impact the business, earthquake, have material as in don't residential that. our that

Operator

Our is [Operator with Instructions] next Meyer KBW. Shields question from

Meyer Shields

of quick I questions, bunch can. A if like

I First, higher residential does I'm targeting accompanying translate net paper? worth Cincinnati homeowners. on earthquake know maybe is writing wondering, that into non-admitted And

D. Armstrong

repeating I that we Meyer, but Would the you you didn't on question? half second. the first apologize, we for I second a paper, heard lost part. non-admitted hear mind

Meyer Shields

the to high-net-worth Cincinnati wondering No paper. write Yes. affords I opportunity is on you non-admitted I'm at all. that problem to the and grow homeowners, know looking whether its Earthquake

D. Armstrong

basis. Yes, non-admitted is on It I'm sorry. a

their are high-net-worth [indiscernible] offering in we E&S an as writing So that policy California. E&S

Meyer Shields

Is up, first premiums see Perfect. the ramping Crop, the the Or third. first come quarter Chris year? when in the this we in a rate? Okay. percentages balance and higher the should normal you're run On that I quarter in think of than that XX% written said

Jon Christianson

Jon Christianson. it's Meyer

we'd expect years, few next the For that fairly be to consistent.

so, And of the third written far, quarter largest the premium. see quarter you'll by be,

bit second where is you'd but fourth third quarter really, largest there'll will second year. the first quarter, for to premium going a be be largest and the little in the and the the be share the then quarter, The expect see to

Meyer Shields

crop planning I of that know terms be the approaches Perfect. going for insurers Okay. a take are different to really are the in low. there profitability booking of really, that book words, In premiums Palomar And taking line? other line combined below until, let's ratio that waiting say, the before of XXX%. on, on How the booking fourth is business. guess, I lot the retained But retained quarter

Jon Christianson

good Yes. question. It's a

bit premium we in, premium June-ish, that originated will earlier. wait The that have come And little will effect acreage generally to of reports quarter for with then, in in start mostly the we third lot of catch-up a which is but it. A a book coming July.

there with and at that point in so, will ratio. slight premium, a earned be we book a written then And the obviously comes of time, all will which of combined catch-up premium,

it of will earning some remainder and does end throughout quarter as there -- of then So most that third of as end at be the year, year. the of in the the the

So we the will most business. the third but of of that for of book then fourth booking some the it, call quarter written be through those, premium, profitability and

T. Uchida

end recognized. terms the fourth the loss market the -- others in into quarter you confidence on at profits are the Yes. third modeling Meyer, the more of of to I'd when clear those similar we year. in becomes how the the gives which in and quarter, or Usually, of say the that taken we'll for ratio look timing

Meyer Shields

talked bigger growth or ballparking and And should Is describing sure how for that not ask question, of, the to Perfect. how relevance this, there but higher-size on I'm of know, any category? way being the last Okay. exactly accounts. and I about it more Mac, you don't allow

D. Armstrong

our Meyer, the [ our to size week A when I team. We financial commercial environmental in underwriters now. were X a impactful. liability it's then, rating? team get that it's pleased for asked that quantify us ], quarter think hard probably ago. they are going might had we But Yes. our be underwriting a an most professional or And more immediately meeting to So, and right relevant increase for with

over would and that I we that to see like in XXXX channels opened lot few it was different So love previously. distribution we a got couldn't say when what up million, a it's $XXX

certain about insured Now the rating it's and appetite larger just for credit more accounts. requirements

I quantify can't So right it now.

think I help lot, open I I'd definitely give a a a think up love to I to and number. would standpoint. now. you going it can't right recruiting it's from dollar just But

Operator

next is Our JPMorgan. from Pablo with Singzon question

Pablo Singzon

you're What prices exposure X%? for up holding the on dollar X% that But get do depend if also or Chris, you X% structure. reinsurance by, price than more benefit increase assuming? how you will savings XOL is guidance. go pricing you if Maybe dollar on would and Mac embedded of know cost say, constant, what all much about in mentioned get reinsurance favorable only dollar or I the

T. Uchida

about buying loss look great of that at and we've you our our So increase When exposure. before a reinsurance That's $XXX will we in risk Yes. million, talked right? to it X transfer the question. about of last be the cost more book, excess June was cover

rate increase. that. it, up to million, sort Right $XXX spending, some expecting be our of that were let's million We exposure of So on XX%, we're now, when let's $XXX-ish top saying went right? going call X% say, we're

that you math. of do So kind

backwards. you it work of So just kind

savings on over million, million have treaty that's the full a X% $XXX you If year. $X.X

our standpoint, it about probably that's when in you there. go So think to way from the right

when exposure to math, about to just change that's is think million at is our But or do Now our $XXX [indiscernible] we that. that like potential next cost not anything base probably the going to our the renewal. or want is the what opportunity want what additional saying be you right

Pablo Singzon

guidance guys I those all-in that you a call let's ratio that, as Is to think given about and, still like Yes. points but And that X faster memory might rusty, on in tad faster? to Do this you the non-Earthquake. what call a in My second here? thinking be the think, mix deterioration be makes attritional it, margin sense. quarter. mix that then, because follow-up said I attritional growing X about point Investor XXXX margin question, Chris, you said might stand All it just -- had then, think about than change, that seems we like Earthquake And Day, business lines does the for as before. combined per just are the had guidance

T. Uchida

I Yes, maybe a points X question. would I conservative. little to think is, say, good bit a that's X point Yes,

for XX% year. I XX%, in of we think good the is midpoint full that of kind of is to about XX% to our up if we get it the range feel which where range,

around a think does I it on move basis. quarterly

You guys with don't the control Obviously, familiar we business. are very losses. insurance the

other very X is it swings going in doesn't point X or it or naturally anything X it we're go But X quarter, where going. comfortable point where direction, points overall, are down. go, if can up It's the just with points mean and things also So a things wrong.

some that's strong We of the and Marine you Inland in to business -- attritional growth lines are be that That's property. be special going to Casualty. good very our going have seeing

going So strong feel going growth the lined When a and here, there. to how but it everything Day, with think back expected, way -- we Investor does of I'm is I off pretty look lot we've up. I'd about consistent have memory

variation I'd on We material We what we some those, call not haven't Investor shares. started of quota little made significant changes of to our any what more shared a bit taking Day. from a but with

that participation. And the at thesis same some Investor Day maintaining was of

time, margin bottom over say, sharing balance that line next of sheet. start onto start that more I to will more a grow we say, grow our continue because bottom time. our over to line. we horizon, That's all over coming grows, the we start on would reinsurers is are business putting on still, Then or a not these will our that lines, I'd -- lot say will But help pull more a to as some lever lines the that, more can we of and which help to profitable XX-year taking with of can we will would sheet, have I and going sheet start those so, obviously And are, balance happen continue which where year. X to balance profitability

D. Armstrong

still up I even would that we Chris thing point feel good about points, describing. very add the loss moves was is, Pablo, sub-XX% a X combined, ratio like X if that And, or

Pablo Singzon

a also ceding of makes better share. acquisition think, I stayed you think as And me, last quota you But gross Casualty then, for then commissions the expenses sense. you That referenced said percentage flat. had on Yes. that, earned,

right? is that a I appropriate more that So with the thing it guess, say. [ that's benefit on the read? seem overall meaningful, doesn't the number, fair? ] that like ceding that correct Is Then Is to

D. Armstrong

Yes.

about Marine a just Inland mix, XX% of business. share Other was constitutes number. matter it's that right? business think Casualty the Property -- and only XX% And what in of probably is of I quota that

call So improved overall mix. It's just that's -- ceding it, business X% commission. that of see did slightly

Operator

time. comments. I would There are like at for to no Mac this hand any closing questions over further to floor Armstrong the back

D. Armstrong

you of our didn't results if at strong you, and success, start Well, and remain off thank hard we're all, and ability for participation, who dedication our and driving ultimately to continued questions, remiss is be our and most in continued would to years.I conclude, your this past thank to business, which I continued our earnings deliver returns. just the terrific joined behind of growth and focus trajectory this thank predictable all your your our with combined Palomar force not confident operator, appreciate quarter, their support.To XX these us team the but morning. the And a work, to We year. I

our aside, year we company. to XX-year recently public as a fifth addition an As in anniversary, celebrated our

these And last our support years. investors X so, I thank to for want

very nice and you much. to and behalf quarter. We will value.Thank to speak day, continue drive will work in on next a you earnest your shareholder Have

Operator

conference today's call. This concludes

your may for at Thank time. participation. you You your lines this disconnect

Palomar (PLMR) 3 May 242024 Q1 Earnings call transcript